Florida Asset Protection & Estate Planning Blog

Proper Long Term Care Planning Helps Ensure Best Care

2012-01-25T13:03:24Z

There is no question that long term care for the elderly is expensive. Similarly, there is no question that as the population ages, the cost of long term care will continue to increase if for no reason other than the basic economic propositon that increased demand pushes prices higher when the supply doesn't increase proportionally. With boomers turning 65 at the rate of 10,000 a day there is practically no way for supply to keep up with demand.

It's also true that everyone doesn't have the financial resources to obtain Cadillic levels of long term care for their elderly family members. That doesn't mean that you should throw in the towel and take whatever care is available for your elderly parent, sibling or spouse.

Long term care planning, whoever your are, whereever your are, whatever the physical or medical condition of your elderly loved one, and whatever your financial circumstances, can help ensure that your elderly loved one receives the best care available for their own needs. Long term care planning includes ensuring that you receive all of the financial benefits that you may be entitled to receive, such as Medicaid benefits or VA Pension Benefits (Aid and Attendance).

So, where do you start?

Where you start will depend on whether you are in a "crisis" mode or if you are doing "advance" planning.

"Crisis" Planning

A "crisis" mode does not mean there is a medical crisis. It means that there is an immediate need to take some kind of action regarding the long term care of the elderly adult. Often it is caused by a fall, stroke, or other incapacitating event that causes an immediate need for nursing home care. The first step for this type of planning usually involves finding an appropriate skilled nursing facility to provide rehabilitation or residenctial care for the stricken elderly person. The second step usually is to find a way to pay for the long term care without depleting all of the eldedly person's financial resources, or to find a way to pay for the long term care when financial resources are limited.

Often, when this kind of planning is required, there have been no advance directives put in place, and it sometimes is necessary to have a court supervised guardianship established so that someone has the legal authority to act on behalf of the elderly person. The expensive, time-consuming, and invasive guardianship usually can be avoided if advance directives are in place before the "crisis" arises.

Advance directives include: (1) a durable power of attorney for financial matters; (2) a designation of health care surrogate to provide for medical decisions when you are unable to communicate with your medical care providers, and (3) a living will.

Advance directives should be prepared, ahem, in advance of the need for those documents. If the elderly person no longer has "legal capacity" to sign such documents, the court-supervised guardianship may be the only option available to provide the legal authority necessary for a family member or loved one to make decisions on behalf of the now incapacitated elderly person.

Advance Planning

If you are not in a crisis mode, and are preparing for the inevitable need for long term care in advance, your first step should be to work with an elder law attorney who can help you design and implement a long term care plan that works for you and your family, based on your financial circumstances and medical condition.

An experienced long term care attorney can help you prepare for your long term care needs by providing the advance directives discussed above, as well as assist in restructuring your assets so that your long term care needs financially do not impoverish your spouse, and help you preserve the assets you have accumulated during your lifetime are not exhausted by the costs of your long term care.

Legal Options

Your long term care attorney may use trusts, the re-titling of assets, a long term care spend down plan, or other options to ensure that your assets and financial resources are protected from the rising costs of long term care, and yet ensure that you receive the best long term care available for your circumstances.

The most effective planning can be accomplished before the planning is needed, so don't wait until you're in crisis mode if you want the best planning available for you and your family.

Why You Should Not Create a Special Needs Trust

2012-01-19T16:46:23Z

Let's say you have a child with "special needs," or a sister, brother, mother or other family member. You have not created a special needs trust as part of your own estate plan. Why not?

We know why not. We have heard pretty much all the explanations and excuses. Here are a few, and some thoughts we would like you to consider:

I don't have enough money to need a special needs trust. Really? You don't have $2,000? Because that's all you have to leave to your child outside a special needs trust to mess with their SSI and Medicaid eligibility.

I can't afford to pay for the special needs trust. We apologize that it can be expensive to get good legal help. But the cost of preparing a special needs trust for your child is likely to be way, way less than the cost of providing a couple month's worth of care. That is what is likely to happen if you die without having created a special needs trust, since it will take several months of legal maneuvering to get an alternative plan in place. Even if there is no loss of benefits, the cost of fixing the problem after your death will be several times that of getting a good plan in place now.

I've already named my child as beneficiary on my life insurance/retirement account/annuity. Ah, yes -- our favorite alternative to good planning. If your child is named directly as beneficiary, you may have avoided probate but complicated the eligibility picture. Their loss of benefits will occur immediately on your death, rather than waiting the month or two it would have taken to get the probate process underway. This just might be the worst plan of all.

It'll all be found money to my kids. I'll let them take care of it if I die. We have bad news for you: "if" is not the right word here. That aside, you should understand that a failure to plan means you are stuck with what's called the law of "intestate succession." That means (in Arizona -- if you are not in Arizona you might want to look up your state's law) that if you die without completing your estate plan, your spouse gets everything unless you have children who are not also your spouse's children. If you are single, your kids get everything equally. If your child on public benefits gets an equal share of your estate, we will probably need to either (a) spend it all quickly or (b) put it into a "self-settled" special needs trust. That means more restrictions on what it can be used for, and a mandatory provision that the trust pays back their Medicaid costs when they die. All their Medicaid costs. Including anything Medicaid has provided before your death. Wouldn't you like to avoid that result? It's simple: just see us (or your lawyer if that's not us) about a "third-party" special needs trust. The rules are so much more flexible if you plan in advance.

My child gets Social Security Disability (or Dependent Adult Child) Benefits and Medicare. Good argument. Because those programs are not sensitive to assets or income, your child might not need a special needs trust as much as a child who received Supplemental Security Income (SSI) and Medicaid (or AHCCCS or ALTCS, in Arizona). But keep these three things in mind:

Even someone who gets most of their benefits from SSD and Medicare might qualify for some Medicaid benefits, like premium assistance and subsidies for deductibles and co-payments. Failure to set up a special needs trust might affect them, even if not as much as another person who receives, say, SSI and Medicaid.
Even someone receiving Medicare will have some effect from having a higher income. Premium payments are already sensitive to income, and future changes in both Medicare and Social Security might result in reduced benefits for someone who has assets or income outside a special needs trust.
If your child has a disability, it might be that a trust is needed in order to provide management of the inheritance you leave them. If they are unable to manage money themselves the alternative is a court-controlled conservatorship (or, in some states, guardianship). That can be expensive and constraining.

I'm young. We agree. And we agree that it's not too likely that you will die in the next, say, five years (that's about the useful life of your estate plan, though your special needs trust will probably be fine for longer than that). But "not too likely" is not the same as "it can't happen." You cut down your salt and calories because your doctor told you it'd be a good idea -- even though your high blood pressure isn't too likely to kill you in the next five years, either. We're here to tell you that it's time to address the need for a special needs trust.

I'm going to disinherit my child who receives public benefits and leave everything to his older brother. That will probably work. "Probably" is the key word here. Is his older brother married? Does he drive a car? Is he independently wealthy? These questions are important because leaving everything to your older child means you are subjecting the entire inheritance to his spouse, creditors, and whims. And have you thought out what will happen if he dies before his brother, leaving your entire inheritance to his wife or kids? Will they feel the same obligation to take care of your vulnerable child that he does?

I'll get to it. Soon. OK -- when?

I don't like lawyers. We do understand this objection. Some days we're not too fond of them, either. But they are in a long list of people we'd rather not have to deal with but do: doctors, auto mechanics, veternarians, pest control people, parking monitors. Some days we think the only other human being we really like is our barista. We understand, though, that if we avoid our doctor when we are sick the result will not be positive. Same for the auto mechanic when our car needs attention. Also for the vet and all the rest. In fact, the only one we probably could avoid altogether is the barista, and we refuse to stay away on principle.

Seriously -- lawyers are like other professionals. We listen to your needs, desires and information, and we give you our best advice about what you should do (and how we can help). Most of us really like people. In fact, all of us atThe Coleman Law Firm, PLLC, really like people -- it's a job requirement. We want to help, and we have some specialized expertise that we can use to assist you. Give us a chance to show you that is true.

We also know a good barista.

This article is a reproduction of an article from the Phoenix, Arizona law firm of Fleming & Curti, PLC.

Happy Holidays! Merry Christmas! Happy Hanukkah!

2011-12-23T11:54:35Z

To all of our friends, clients, vendors and readers, we wish each and everyone of you a very happy holiday season, filled with good spirit and family gatherings. May your New Year be your happiest, and most prosperous, ever.

But, should that holiday party or family gathering turn out to be a little stressful, here's some good counsel on how to avoid committing a crime against family from Gina Simmons of Forbes.com:

Holidays: An Occasion for Crimes of the Heart

Gina Simmons, Contributor

In Beth Henley’s Pulitzer Prize-winning play Crimes of the Heart, an attempted murder, graft and suicide form the backdrop for a story about the vulnerability of the human heart.

In many families, the holidays set the stage for a dysfunctional dance of drunk and disorderly conduct. Many of my clients dread visiting relatives during the winter holidays where the weather feels cold both inside and out. Rates of intimate partner violence and child abuse increase with the appearance of mangers and Christmas trees. For survivors of abuse, the holidays come with flashbacks of trauma that can trigger depression and anxiety, years after the abuse ended.

Holiday times also foster high expectations for love, connection, joy, gifts and good cheer. These high expectations collide with work pressure, time and money constraints and countless chores. Women feel more stress than men during the holidays, as we do most of the planning, shopping, cleaning, cooking, gift-wrapping and entertaining. Cranky, tired, stressed-out women don’t look like a Norman Rockwell painting of holiday bliss. Resentment builds when husbands look forward to the holidays as a time to rest, watch football and drink beer. Frazzled and furious women rage at their reclining-remote-grabbing men while so much work remains undone.

Even Rats Have Empathy

Relationships work better with empathy. In a recent study, rats showed empathy for another rat in distress, and made sacrifices to their own pleasure in order to help a stranger. Yet year after year we highly evolved humans avoid those in distress, even those in our own families. We criticize and judge, and fail to empathize with the ones we love. Instead of committing these crimes of the heart, create holiday happiness by showing care and patience, considering the unique pressures we all feel at this time of year.

Mind Readers are illiterate

When we expect others to know what we need, (mind read) we set them up for failure and set ourselves up for disappointment. When we assume we know the motives, thoughts and feelings of others, we’re engaged in mind reading, a thought distortion that leads to interpersonal conflict. Aunt Grace thinks your children are lazy because she bought them athletic socks for Christmas. Your secret Santa intended to insult you by giving you a desk calendar, (he’s implying you don’t manage your time well). Don’t over think the meaning of gifts and just appreciate that someone bothered to do something for you.

Let Go

At the end of an Iyengar yoga class, students recline on their backs in Savasana, or “corpse pose.” The instructor softly says, “let go everywhere,” as the body fully relaxes into the floor. This provides an experience of acceptance and release of control. During holiday times it helps to let go of the need to control the feelings and behaviors of others. Relinquish the need for everyone to feel happy. Let people follow their own emotional journey. With kindness and patience, or unkindness and impatience, friends and family will get along or not.

Do No Harm

If your family tests your empathy skills, triggers futile attempts at mindreading and challenges your capacity to let go, focus on minimizing harm to yourself and others. Stick to moderate drinking (one to two drinks in any 24-hour period). Get enough sleep so you have energy reserves for patience and self-control. Eat something nutritious every four to five hours to keep crankiness at bay and prevent overeating. Allow extra time for errands and shopping to avoid irritability with traffic and crowds.

Every year bloggers and journalists write about holiday stress, and every year tempers flare, fights erupt and resentments build. Lonely people feel even lonelier at this time of year, as their brain responds differently to social occasions, perceiving conflict before joy. Lend patience and care to the lonely, sick and those in chronic pain. Because after the gifts are opened, the good-byes are said, and the decorations are put back into their boxes, you will want to be found innocent of all crimes of the heart this holiday season.

This article is available online at:
http://www.forbes.com/sites/crime/2011/12/23/holidays-an-occasion-for-crimes-of-the-heart/

Veterans Pension Benefits - Aid and Attendance - Housebound Aid

2011-12-14T11:49:16Z

For about the last year I have been an Accredited Attorney with the Veterans Administration, Department of Veterans Affairs. Over that period of time I have been exploring all of the nuances of Veterans Benefits and the situations in which Veterans Benefits can be of most value to my clients and prospective clients. During that period of time we also have successfully represented several clients through the process of applying for and being awarded Veterans pension benefits and Aid and Attendance benefits.

The Veterans pension benefit and Aid and Attendance benefit have been available to veterans since the Spanish American War. A significant improvement was made in 1979. The benefits can be quite meaningful especially for the veteran, or surviving spouse of a veteran, who needs or is receiving in-home care or needs or lives in an assisted living facility. In some cases the Aid and Attendance benefit can be a favorable alternative to Medicaid benefits for the veteran, or spouse, who is in a skilled nursing facility. The basic pension benefit, for those who qualify, can be as much as $1,337 per month for a veteran with spouse; and the Aid and Attendance benefit can be as much as $2,019 per month for a veteran, or spouse, who is receiving in-home care, or lives in an assisted living facility or skilled nursing home. These benefits are not subject to income tax.

Notwithstanding the significant value of these benefits, the Veterans Administration does little to let veterans know of the existence of these benefits. That’s where I would like your help. I would like for you to tell any veteran you know, or the surviving spouse of a deceased veteran, that these benefits are available and ask them to call our office to determine whether they might be eligible for these benefits. There are an estimated 19 million veterans who may qualify for these benefits, who are not currently receiving them. There are potentially multiples of that number of surviving spouses of veterans who may qualify for survivor benefits.

The basic eligibility requirements are that the veteran have served on active duty for at least 90 continuous days, at least one day of that service be during a period of war, and that the veteran is over 65 years of age, or if under age 65 that he or she suffers a total and permanent disability – the disability is not required to be service connected. There are also income and net worth requirements, but there are a host of legal planning options available to facilitate meeting the income and net worth requirements. You can find more information on VA Benefits at our website: www.TheColemanLawFirm.net/VA_Benefits.php.

If you have family members, or friends, who may meet the basic eligibility requirements, give them one of the best gifts possible this holiday season – information that could lead to meaningful tax free income resulting from their service to our country. Ask them to call our office (904-448-1969) to learn whether they may qualify for any of these benefits. My assistants, Sherri, Candace and Ashlee, will help determine whether they might qualify, and schedule an appointment with those who may be entitled to these benefits.

Our very best wishes from The Coleman Law Firm to you and your family for a happy holiday season and a prosperous new year.

Medical Emergencies During the Holidays - The Need for Advance Directives

2011-12-04T15:43:29Z

It's the holiday season. No one wants to talk about estate planning, advance directives, life prolonging procedures, or dying. It's supposed to be the festive part of the year. But, people do die during the holidays. They also have strokes, heart attacks, aneurisms, and other health failures. Accidents occur daily. Some of them fatal.

The story told by Carolyn Rosenblatt, in "Don't Pull the Plug! A Family's Battle with the Hospital," is reflective of what can happen if consideration of end of life decisions are put off until its too late. In "Don't Pull the Plug!" the patriarch of the family experienced an aneurism. The brain was essentially vegetative, but still had some activity in the lower brain. There was no advance health care directive in place (living will or health care power of attorney). The hospital didn't want to continue providing life support procedures for someone who was essentially "brain dead" (and who didn't have insurance or the financial resources to pay for the application of life prolonging procedures). The family wanted to keep their husband and father alive as long as there was any brain activity - no matter how little.

The lawyers were brought in. A second opinion was sought. An IV was inserted to provide sustenance for the father until the new evaluation was completed. Two days later, the minimal brain activity ceased and the fight ended.

During those few days the family experienced much anxiety, incurred attorney's fees, and suffered avoidable turmoil. The hospital faced the threat of a lawsuit, had the normal operations of the hospital disrupted, and also incurred unnecessary attorney's fees.

All of the anxiety, turmoil, disruption, legal threats and attorney's fees could have been avoided had the father put advance directives in place.

Advance directives include a living will, a health care power of attorney (designation of health care surrogate), and possibly a durable power of attorney.

Video Answer to the Question: What is an Advance Directive?

Each of these documents can be drafted to include provisions that are important to you. Consultation with an experienced estate planning lawyer or elder law attorney may be helpful if you want to provide specific instructions or address unique concerns.

However, you should consider obtaining basic advance directives (the living will and designation of health care surrogate) even if you don't want to consult with an attorney, so that you and your family don't have the same experiences of the family discussed in "Don't Pull the Plug."

We offer such basic documents through our website at very reasonable costs. If you don't have advance directives in place, and want to get basic documents at rates affordable for everyone, please go to Legal Documents Online - Attorney Reviewed.

Copyright 2011 - The Coleman Law Firm, PLLC

Honoring Veterans 11-11-11

2011-11-11T15:21:54Z

Today is Veterans Day 2011. Our sincere thanks and gratitude to the many in America who have served our great country, and our heartfelt desire that the politicians running our country can have the backbone and resolve to keep it great.

More than 41 million Americans have served in the US military since 1775. Approximately 23 million of them are alive today, and more than 17 million living veterans served during a period of conflict. There are approximately 7.391 million veterans of the Vietnam War (1964-1975). Approximately 2.275 million veterans alive today served in the Korean War (1950-1953). More than 2.244 million veterans of Operation Desert Shield/Storm are surviving (1990-1991). And, more than 1.711 million veterans of World War II are alive today (1941-1945). [Statistics courtesy of "America's Wars", Department of Veterans Affairs.]

All of those veterans serving during the period of time of any conflict (almost 12 million veterans) may be entitled to various benefits from the Veterans Administration, including, among other potential benefits, pension benefits or Aid and Attendance benefits. The survivors of deceased veterans may also be entitled to VA Pension benefits or VA Aid and Attendance benefits. No service connected disability is required to qualify for these benefits that have been long authorized by federal law.

Qualification is based on age (over 65), the veteran's active duty service, and at least one day of the active duty service was during a period of war, and certain other financial requirements.

These benefits fall into two main categories: VA Pension benefits, and VA Aid and Attendance Benefits.

    VA Pension Benefits

        Pension is a benefit paid to wartime veterans who have limited income are who are age
        65 or older. The maximum annual pension rate for a veteran without spouse or child is
        $11,830 annually. For a veteran with one dependent, the maximum annual pension rate
        is $15,493.

    VA Aid and Attendance and Housebound Benefits

        Aid and Attendance is a benefit paid in addition to the monthly pension above. It is
         payable if the veteran
            (1) requires the aid of another person inorder to perform personal functions required
            in everyday living, such as bathing, feeding, dressing, attending to the wants of nature,
            adjusting prosthetic devices, or protectin himself/herself from the hazards of his/her
            daily environment; or
            (2) the veteran is bedridden, in this his/her disability or disabilities requires that
            he/she remain in bed apart from any prescribed course of convalescence or treatment;
            or
            (3) the veteran is a petient in a nursing home due to mental or physical incapacity; or
            (4) the veteran is blind, or so nearly blind as to have corrected visual acuity of 4/200
            or less, in both eyes.

        Housebound benefits are paid in addition to monthly pension if the veteran,
            (1) has a single permanent disability evaluated as 100-percent disabling and, due to
            such disability, he/she is permanently and substantially confined to his/her immediate
            premises; or
            (2) the veteran has a single permanent disability evaluated as 100 percent disabling
            and another disability, or disabilities, evaluated as 60% or more disabling.

Similar "death pension" benefits are available for an unremarried surviving spouse of a veteran, or an unmarried child (who is under 18, in school and under 23, or was incapable of self support before the age of 18) of a deceased wartime veteran.

If you, or your spouse, or your parent is a veteran who served on active duty during one of the times during which our country was at war, you may be eligible for Veterans Pension benefits. If the veteran is in an assisted living facility or nursing home, the veteran may be entitled to Veterans Aid and Attendance benefits.

I am an accredited VA attorney for Veteran's Pension benefits and Aid and Attendance benefits.

You can get more information about VA Pension benefits and Aid and Attendance benefits at our website.

Aging Boomers Ignorantly Blissful About Long Term Care

2011-11-03T15:53:45Z

Ignorance is bliss! The baby boomers, turning 65 at the rate of 10,000 per day, seem to be fooling themselves into believing they won't need long term care during their lifetime.

In a recent study conducted by Genworth Financial (the 2011 Financial Reality Check Study), one of the larger providers of long term care insurance, less than 33% of the respondents believe it is only somewhat likely that they will need long term care. Only 7% think it is "extremely likely" they will need long term care.

The reality of long term care is quite different from the wishful thinking exposed by the Genworth study.

According to Medicare.gov:

        1.    This year more than 9 million men and women over the age of 65 will require long term care.

        2.    By 2020 (just 8 years away), more than 12 million Americans will need long term care.

        3.    People who reach age 65 (10,000 new ones everyday), have about a 40% chance of entering a nursing home, according to the U.S. Department of Health and Human Services.

Long term care is not only expensive, whether the care occurs in home, or in an institutional setting, it is also costly emotionally, mentally and financially for those providing long term care to family members. For more information on the impact of long term care other than the out of pocket costs, Genworth has prepared "Beyond Dollars."

Here are some statistics from that publication:

            88% of recipients of long term care said their household income was reduced by an average 34% due to the long term care event

            60% reported a need to cut back on family expenses after a long term care event

            63% said they reduced their savings by an average of 61% reduction

            49% of long term care recipients said they had not considered the possibility of needing long term care

            29% of care recipients required care for 3 years or more

Here are some quotes from family members of long term care recipients that are found in Beyond Dollars:

"Anger at my brother and sister for not helping more with our dad . . . Stress with my wife over how much of 'our time' this was taking up."

"Since my mom lives with us, we now have someone else in the house, plus caregivers 12 hours a day. For the first 38 years of our marriage, it was just my husband and I . . . This has required a change for both of us."

"We expected things to change . . . But the reality of careing for someone 24/7 changes life the way you know it. It's nothing like I imagined."

All of these quotes could have come from many of our clients who deal with long term care issues already. Blissful ignorance by the aging baby boomers is not going to take away the reality of long term care and its costs, both financial and otherwise.

Why You Should Periodically Review Your Estate Planning

2011-11-02T11:51:44Z

Diamonds are forever! Estate planning is not!

The travails of the James Brown (Godfather of Soul) estate show just how bad things can get when estate planning documents are not updated when there are changed circumstances. Brown didn't update his estate planning after a late in life marriage, nor after his last child was born. The result is five years of probate litigation - and still counting! For a detailed analysis, take a look at this Forbes article: Court Battles and Debt Leave James Brown Estate Not Feeling Good.

As we have discussed in previous posts, beneficiary designations are often the most overlooked changes that need to be made when life intervenes. As recently as yesterday, a client needed a "reminder" that his retirement plan and life insurance beneficiary designations had not been changed to coordinate with his estate planning documents, as a result of his second marriage.

Additionally, this same client came to the realization during our review of his planning that his now 77 year old brother may not be around to act as successor co-trustee with his new wife. So we are amending his revocable living trust to add a successor co-trustee to act if his brother is unable, or unwilling, to act in that capacity.

A new marriage or an aging fiduciary are but two of many reasons that estate planning, and estate planning documents, should be periodically reviewed and updated when appropriate. Sometimes changes in the law either necessitate or suggest estate planning changes - such as Florida's new power of attorney statute.

When should an estate plan be reviewed?

We provide our clients with the following "Annual Review Checklist" to help remind thiem of the need for periodic review of their estate planning and estate planning documents. Basically, if you answer yes to any of the following questions, it suggests a need to review your estate planning.

ANNUAL REVIEW CHECKLIST

Below you will find a number of questions. A positive answer to any of them may indicate a need to review your estate plan. Check the appropriate boxes. Call our office to set up an appointment to discuss how any of the changed circumstances may affect your existing planning.

SPECIFIC BEQUESTS

I would like to make specific bequests to individuals not presently included in my plans - or delete the names of one or more

Persons (or charities) currently named.

I would like to change the amounts of some of the bequests I have made.

CHANGES IN VALUATION

The value of my estate has changed more than 5 percent since the last review of my estate plan.

SPECIAL PROVISIONS FOR CHILDREN

My health (my spouse’s or children’s health) has deteriorated substantially in the last year.

NEWLY BORN OR ADOPTED CHILDREN

A child (grandchild) has been born (or adopted) since our last review.

HANDICAPPED OR INCOMPETENT CHILDREN

A child (grandchild or other dependent) has become handicapped or seriously injured since or last review.

STATUS OF FAMILY MARRIAGES

A member of the family has become divorced or separated since our last review.

CANCELLATION OF LOANS TO CHILDREN AND EQUALIZATION OF INHERITANCE

I would like to discharge an obligation owed to me by cancelling the loan in my will.

I would like to provide a clause to equalize any gifts made in the past (or to be made in the future) to certain children (Grandchildren).

LIFE INSURANCE

I have added (or dropped) more than 100,000 of life insurance since our last review.

I have (or would like to) change a beneficiary designation on an existing policy.

I feel I may need more life insurance but I don’t know how much to purchase or what type to consider.

GIFTS TO MINORS

I would like to make some substantial gifts to minor children (grandchildren).

GIFTS TO CHARITIES

I would like to add (delete) one or more charitable beneficiaries.

I would like to change the amount of my bequest to certain charities.

BUSINESS INTERESTS

I have entered into stock (LLC, partnership) buy-sell agreement since our last review.

My business situation has changed significantly since our last review.

GUARDIAN, PERSONAL REPRESENTATIVES AND TRUSTEES

I would like to name a particular person as advisor to my executor and trustees.

I would like to reconsider the designation of the guardians, personal representative and trustee I have named.

OTHER

I would like to review my estate plans for the following reasons.

I’d like to know how the latest tax law affects my estate plan.

If, in your review of this checklist you see statements that apply to you, you may want to schedule an appointment with your estate planning lawyer to update your estate plan, and your estate planning documents.

Copyright 2011 - The Coleman Law Firm, PLLC

Nursing Home Costs Now $87,000 Annually

2011-10-26T11:14:10Z

MetLIfe has just released its annual survey of long term care costs. Not surprisingly, those costs are rising faster than inflation with the national average cost of a skilled nursing home facility at $87,000. The cost of an assisted living facility rose from $3,293 to $3,477 monthly, or $42,000 annually. For those needing dementia care, the costs are even higher - an average of $92,000 annually for a skilled nursing facility, and $55,000 a year for an assisted living facility.

The full MetLife Mature Market Survey also reveals that the costs of extra services can significantly increase the averages. For instance, the additional montthly charge for assisting a resident with bathing is $307, to manage medications $370 per month, or for personal care such as toileting, transferring or incontinence management $530 monthly.

Average home care aide services average about $15 per hour, but vary from state to state.

The most problematic issue arising out of the plethora of information about our long term care health systems and costs, is that the majority of American families cannot afford the cost of long term care. More than half the families in America have less than $55,000 in savings. Only about 7,000,000 individuals have long term care insurance. As we previously noted, the President's highly touted CLASS act, the federal program that was supposed to provide long term care for the nation has been abandoned as too expensive.

There remains but three ways to pay for long term care: (1) from your own resources, or those of your family; (2) long term care insurance; and (3) government assistance through the Institutional Care Program administered by the Medicaid program. Certain VA Penson benefits can provide some assistance with the cost of assisted living facilities (for details see VA Benefits - Aid and Attendance).

If your and your family's resources are limited, or required for the financial needs and security of other family members, and you don't have long term care insurance, then the only alternative for long term care in a skilled nursing facility is with the financial assistnce of Medicaid. You can find more details on the requirements for qualifying for Medicaid benefits and completing the process for obtaining Medicaid benefits at our website: Medicaid Planning.

Copyright 2011 - The Coleman Law Firm, PLLC

Special Needs Trusts - Shifting Purpose, Increasing Value

2011-10-23T17:14:55Z

Over the past week, our office has experienced an unusual influx for a one week time period: three new clients seeking special needs trust planning for their disabled relatives. One case dealt with autism, one with Downs Syndrome, and one with severe epilepsy. The common thread running through all three cases was a dual concern that public benefits for disabled individuals are threatened by budget issues, and the desire to ensure that their loved were able to qualify for and receive whatever public benefits programs were available.

What is a special needs trust?

A special needs trust is a trust that is specifically designed to provide support for disabled individuals without causing ineligibility for various applicable public benefits programs, such as Medicaid, SSI (supplemental security income), or other programs offered by various state and local governments. Such a trust is imperative for those who plan, or desire, to leave an inheritance to a relative or loved one who is disabled and receiving public benefits from any source. If an inheritance is left directly to the disabled individual, in most cases it will render the individual ineligible for virtually all of the public benefits programs. The special needs trust allows the inheritance to managed by a trustee chosen by the person establishing the trust, with the specific instructions contained in the trust that the trustee should not make any distributions to or for the benefit of the disabled individual that would cause ineligibility for benefits received from governmental sources.

Why is it important for someone to put a special needs trust in place if they want to leave money to a disabled person?

The issues directly prompting the greater than usual activity in the special needs area include reductions and elimination of some of the public benefits programs caused by budget restrictions forced upon government agencies. That, coupled with the realization by the parents of the disabled individuals that government benefits programs historically relied upon to provide basic support may not longer be available for that purpose, has led many to explore more closely the benefits of a special needs trust to ensure that their disabled loved ones will be properly cared for after the parents are no longer able to do so.

Interestingly, in this weekend's Florida Times Union appeared an article entitled "Programs for Disability Benefits on Unsustainable Financial Path." The article describes the increasing cost of disability programs for the Social Security Administration and the decreasing revenues generated by the program because of the level of unemployment. At the same time, in the same newpaper, was a letter from a reader describing the need for and positive impact provided by the Social Security Disability program.

The bottom line is that special needs trusts are becoming increasingly important as a means of providing support for the disabled, but the basic purpose of the special needs trust is shifting from that of providing enhancements to the disabled individual's basic financial life support, to replacing government programs as the primary source for that basic financial life support for disabled individuals. If the present trend continues, it may become imperative for families to establish a special needs trust for their disabled loved ones just to ensure that basic support in the future.

One of the unique features of a special needs trust established during the parents' lifetime (an inter vivos third party special needs trust) is that anyone can make contributions to the trust at anytime. In many instances, family and friends will make the special needs trust the beneficiary of life insurance policies and retirement plans. By funding the trust in such a manner, the parents and other family members are able to directly provide for the care of the disabled individual while they are alive, and upon their deaths the life insurance or retirment plans take over the financial burden.

How do I get a special needs trust into my will for the benefit of a disabled person?

Regardless of how the special needs trust is funded, it is obvious that it is moving from a place of supplementing the needs of the disabled, to providing basic financial support for those individuals who are unable to adequately support themselves.

You can learn more about special needs trusts here.

IRS Increasing Audits of Gift Tax Return Non-Filers

2011-10-19T11:41:09Z

Apparently, the IRS has significantly increased the number of audits it performs for intrafamily transfers of property, where there is no gift tax return filed by the person making the transfer. The extent of the effort is detailed in an article in today's Forbes.com: The New Gift Tax Audits: IRS Identifies Non-Filers Using State Property Records.

The Internal Revenue Code (IRC) requires that anyone who transfers an asset, valued more than $13,000, to another person without consideration, must file a federal gift tax return. The Form 709 is used for this purpose. The IRC requires the filing of the return even if there is no gift tax liability arising from the gift. The gift tax return must be filed for gifts to charity as well. There is no requirement for filing a gift tax return if total gifts during a calendar year to any individual are less than the annual exclusion amount - currently $13,000. The tax code allows an individual to make gifts up to $13,000 each to as many people as you want, without the need for filing a gift tax return.

For the vast majority of people, there will be no gift tax liabiility because of the lifetime exemption from gift tax that each person has available. Currently the lifetime exemption is $5,000,000. (Absent Congressional action before 2013, the lifetime exemption will return to $1,000,000 on January 1, 2013.) That means that each individual has the ability to transfer $5,000,000 worth of assets to other people during our lifetime without incurring any gift tax liability. For someone whose lifetime gifting exceeds $5,000,000 the gift tax is calculated at 35% (currently, rising to 45% on January 1, 2013) of the value that exceeds the lifetime exemption and the $13,000 annual exclusion the IRC allows for gifts made to the same person in the same calendar year.

The IRC requires filing the gift tax return, even though there is no tax liability, in large part because the failure to file the gift tax return means the IRS has no record of the lifetime transfers made by the individual. At death, the exclusion from estate tax is reduced by the amount of the lifetime exemption that was used. For instance if you make $1,000,000 of gifts during your lifetime, your $5,000,000 exemption from estate taxes is reduced to $4,000,000. Failing to file the gift tax return, even when no gift tax liability is present, means your estate tax may be higher at death, and without the gift tax returns on file the IRS would not be aware of that fact.

The Forbes article describes how the IRS is examining property transfer records maintained by the various states to identify intra-family transfers of real property. When such a transfer is identified, and no gfit tax return has been filed, the penalties are significant. Those penalties, which include failure to file and failure to pay (where there is a tax liability), can be as much as 25% of the tax liability for each penalty. Ouch!

One positive aspect of filing the gift tax return is that the filing of the return starts the statute of limitations for the IRS to challenge the value of the property being gifted. The IRS has 3 years from the date of filing the return within which to challenge the value of the gift as reported. If the asset gifted is a hard to value asset, such as the stock of a closely held corporation, raw land, or in today's environment just about any parcel of real property, the IRS must challenge the value reported on the return within three years of the filing of the return. For gift tax returns where there is no liability for gift tax reported, there is a high probability the IRS will not challenge the value prior to the expiration of the limitation period.

Based on the information provided by the Forbes article, it's a good idea to file a gift tax return anytime you've made a gift greater in value than the $13,000 annual exclusion. Your CPA or estate planning attorney can assist you in determining whether you are required to file the Form 709. Based on the level of audits described in the Forbes article, it's a good idea to file those returns timely.

Copyright 2011 - The Coleman Law Firm, PLLC

National Estate Planning Awareness Week

2011-10-17T11:33:42Z

This week is "National Estate Planning Awareness Week" as designated by the United States House of Representatives. Below is the resolution passed by the House of Representatives in 2008. For all the reasons stated in the resolution it's a good time to start your estate planning if you have not already, and if you have an estate plan it's a great time to review the plan to see that it still meets your needs and desires, and deals with all your concerns.

Happy National Estate Planning Awareness Week!

110TH CONGRESS

2D SESSION H. RES. 1499

Designating the third week of October as ‘‘National Estate Planning

Awareness Week’’.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 25, 2008

Mr. THOMPSON of California (for himself, Mr. BACA, Mr. BERRY, Mr. BOSWELL,Mr. BRALEY of Iowa, Mr. CARSON, Mr. CAZAYOUX, Mr.CHILDERS, Ms. CLARKE, Mr. CLAY, Mr. CLEAVER, Mr. COOPER, Mr.COURTNEY, Mr. CRAMER, Ms. DEGETTE, Mr. DELAHUNT, Ms. EDWARDS of Maryland, Mr. ELLISON, Mr. EMANUEL, Ms. ESHOO, Mr. ETHERIDGE,Mr. GILCHREST, Mr. GONZALEZ, Mr. GENE GREEN of Texas, Mr. HALL of New York, Ms. HARMAN, Mr. HILL, Mr. HINCHEY, Ms. HOOLEY, Mr. ISSA, Ms.
JACKSON-LEE of Texas, Ms. KILPATRICK, Mr. LEWIS of Georgia, Ms. MATSUI, Mr. MCDERMOTT, Mr. MCNERNEY, Mr. PERLMUTTER, Mr. RODRIGUEZ, Mr. ROSS, Mr. ROTHMAN, Mr. RUPPERSBERGER, Mr. SALAZAR, Mr. SAXTON, Ms. SCHAKOWSKY, Mrs. SCHMIDT, Mr. SIRES, Mr. WALDEN of Oregon, Ms. WASSERMAN SCHULTZ, Mr. WAXMAN, Mr. WELCH of Vermont, and Ms. WOOLSEY) submitted the following resolution; which was referred to the Committee on Oversight and Government Reform

RESOLUTION

Designating the third week of October as ‘‘National Estate

Planning Awareness Week’’.

Whereas it is estimated that over 120,000,000 Americans do

not have up-to-date estate plans to protect themselves or

their families in the event of sickness, accidents, or until death.

Whereas a 2004 Roper poll commissioned by the American

Institute for Certified Public Accountants found that

two-thirds of Americans over age 65 believe they lack the

knowledge necessary to adequately plan for retirement,

and nearly one half of all Americans are unfamiliar with

basic retirement tools, such as a 401(k) plan;

2

Whereas careful estate planning can greatly assist Americans

in preserving assets built over a lifetime for the benefit

of family, heirs, or charities;

Whereas estate planning involves many considerations, including

safekeeping of important documents, documentation

of assets, operation of law in the various States,

preparation of legal instruments, insurance, availability

of trust arrangements, charitable giving, inter vivos care

of the benefactor, and other important factors;

3

Whereas estate planning encourages timely decisions about

the method of holding title to certain assets, the designation

of beneficiaries, and the possible transfer of assets

during the life of the benefactor;

4

Whereas many Americans are unaware that lack of estate

planning and ‘‘financial illiteracy’’ may cause their assets

to be disposed of to unintended parties by default

through the complex process of probate;

5

Whereas alternatives to disposition of assets after death, such

as planned gift-giving, may accomplish a benefactor’s

goal of providing for his or her family and favorite charities;

6

Whereas careful planning can prevent family members or

other beneficiaries from being subjected to complex legal

and administrative processes requiring significant expenditure

of time, and greatly reduce confusion or even

animosity among family members or other heirs upon the

death of a loved one;

7

Whereas important considerations as to donation of organs

and use of life support functions may be made through

the estate planning process;

8

Whereas the implementation of an estate plan starts with

sound education and planning, and then may require the

proper drafting and execution of appropriate legal documents,

including wills, trusts, and durable powers of attorney

for health care;

9

Whereas the third week of October should be designated as

‘‘National Estate Planning Awareness Week’’; and

10

Whereas the National Association of Estate Planners and

Councils, representing over 28,000 estate planning professionals,

together with the Universal Press Syndicate,

the largest independent newspaper syndicate in the world,

are prepared to provide such educational information to

the public in a focused manner during National Estate

Planning Awareness Week:

Now, therefore be it

Resolved, That the House of Representatives—

(1) encourages the distribution of estate planning information by professionals to all Americans;

and

(2) supports the designation of a ‘‘National Estate Planning Awareness Week’’.
E:\BILLS\HR1499.IH HR1499 wwoods2 on PRODPC68 with BILLS

Alzheimer's - Financial, Psychological, and Social Impacts

2011-10-16T16:52:33Z

Today's Florida Times Union contains an editorial regarding Alzheimer's and an article about the impact on marriage that Alzheimer's has for increasingly large numbers of people. Together, the information provided by both exposes the impact that Alzheimer's has financially, psychologically, and ultimately socially, on both individuals and our society as more and more Americans are afflicted with the incurable disease.

According to the editorial, there currently are 5.7 million Americans over the age of 85 who suffer Alzheimers. By 2050 that number is expected to grow to 19 million. In Florida there currently are 450,000 Alzheimer's sufferers. More than 10,000 baby boomers turn 65 every day now! One in 8 of them will eventually be afflicted with Alzheimer's.

In the general population in America, only 4% of those over age 80 reside in a skilled nursing home. For those with Alzheimer's, 75% live in a skilled nursing facility.

It is estimated that the cost of Alzheimer's to America over the next 40 years will exceed $20 trillion. That's enough to pay off the entire national debt and send ever American a check for $20,000!

Medical payments for Alzheimer's patients over 65 average nine time higher than non-Alzheimer's patients.

Staggering numbers. Yet, we know of no treatment that slows or stops the deterioration to the brain that is caused by Alzheimer's.

Toll on Families

The toll on families caused by Alzheimer's is two-fold. The first is psychological, as the Alzheimer's patient steadily deteriorates. The burden on all family members is great, but the impact on the primary care-giver is often overwhelming. According to the Alzheimer's Association, in 2010 caregives provided more than 17 billion hours of unpaid care (valued at $202 billion). More than 80% of that care is provided by family members. Caregivers experience unusually high levels of emotional stress and depression. Long term care planning can often alleviate some of the toll.

What should I consider when developing a long term care plan in Florida?

Dealing with a spouse with Alzheimer's creates another area of concern and adjustment, as detailed in the article: "Alzehimer's: Is this 'until death do us part?'

When is a spouse no longer a "spouse" for purposes of marriage? The article discusses evangelist Pat Robertson's recent comment that Alzheimer's justifies divorce. It raises many questions, morally, religiously, and practically: when has a spouse "died?" Has "death" occured when the physical embodiment of a human no longer has a mind that functions? Has the spouse with Alzheimer's already abandoned the marriage through the death of memory and cognitive function that comes with full blown Alzheimer's?

Clearly, the fact that the mind has ceased functioning doesn't eliminate the need for the spouse's physcial care. The financial impact of the disease, if not provided to the extent possible through the spouse's resources, will become an expense to society. The follow up question is whether the cost to society should be borne by the local community or the national government?

That leads to the second impact on society which is the financial burden of Alzheimer's. Caregivers, especially family members, may give up their jobs, or reduce the amount of work they perform outside the home. The cost of care, ultimately leading to transferring the patient to a skilled nursing home is significant - whether it be loss of income or lost opportunity.

According to the editoial: "Families resist sending a loved one to a nursing home for financial and for other obvious reasons." Financial is often the overriding concern. Currently the cost of a skilled nursing home for an Alzhiemer's patient often exceeds $80,000 annually, in Florida. How does the typical family cope with that kind of expenditure?

Currently there are three sources of funds for paying for such care: (1) private pay from personal funds, (2) long term care insurance, and (3) Medicaid - the joint state and federal program to provide medical care to the financially needy.

Private Pay

The major problem with private pay is that most families cannot afford to pay $80,000 annually, or more, to care for a family member, without effectively impoverishing the remaining family members. Average household income across the country for 2010 was $51,691 per household, according to the U.S. Census Bureau.

Long Term Care Insurance

The President's proposed long term care insurance program (a part of "Obamacare") is officially defunct. It's final death was announced by the White House just this week. That leaves only privately owned long term care insurance. The National Institute on Aging and Duke University have developed a National Long Term Care Suvey that provides much very detailed information about long term care needs. The National Clearinghouse for Long-Term Care Information provides comprehensive information about paying for long term care. For more information on the impact of the abandonment by the Federal government of the CLASS Act long term care insurance program, and a discussion of how to pay for the long term care needs of financially needy families, see the article: "CLASS is Killed: But How Will We Pay for Long Term Care?"

The short answer to the question of what role does long term care inurance play in providing Alzheimer's care is this: long term care insurance provides a significant role when the individual can qualify medically for its issuance, and can afford the premiums for the insurance. The younger you are when you purchase long term care insurance, the more likely you are to qualify medically for its issuance and the more affordable the payments. For most individuals long term care insurance is unobtainable or too expensive.

Medicaid

MEDICARE does NOT provide nursing home coverage (beyond a short period of coverage available for rehabilitation from injury or disease - 100 days).

Medicaid is the program that provides nursing home care for those who are unable to financially pay for such care. There are a number of eligibility requirements for Medicaid benefits. The most limiting requirements are those related to "countable income" and "countable assets." Funds for Medicaid are provided by the Federal government and are a significant contributor to the US budget deficit. As more boomers reach the age at which Alzheimer's becomes debilitating, the financial needs for the Medicaid program will become greater. What cost will our society be willing, or able, to bear to treat Alzheimer's patients who are cognitively impaired and without memory. Again, very difficult issues, morally, religiously and practically.

Medicaid Eligibility Requirements

Conclusion

Whatever your beliefs may be regarding these issues, they are issues that must be examined, and dealt with by all of us on an individual level, and by our country on a societal level.

What do you think? Share your views.

Copyright 2011 - The Coleman Law Firm, PLLC