Jarvis Law Office

When the Elderly Provide Care of the Elderly

As the human life span continues to get longer, people are sometimes reaching retirement age and finding they have elderly parents who need care. And, sometimes those new retirees are no longer physically capable of providing the care. One possible way to handle this situation was recently written about in the New York Times article "A Twist on Caring for a Parent: Move Into the Home."

The article tells the story of a 71-year-old man who moved into the same continuing care retirement community as his 96-year-old mother. It allows the man to help his mother while still having the facility staff to do what he is not able to do. All chores, such as cooking, cleaning and laundry, are done by the staff.

Obviously, this is an expensive solution to the problem and many families will not be able to afford to have two generations living in the same retirement community. How to take care of an ever aging population is something that elder law experts and legislatures will have to eventually address.

Having elderly children care for their elderly parents is unlikely to work in the long term.

For now, it is best to plan ahead. Through proper retirement and estate planning it is possible to ensure that elderly family members, including yourself, will have proper care.

Contact an estate planning attorney for advice on how to reach that goal.

Reference: New York Times (Jan. 4, 2016) "A Twist on Caring for a Parent: Move Into the Home."

Some Advice on Living Trusts

The goal of many estate plans is avoiding probate and a living trust is popular because of its flexibility. But, despite the ease of use and flexibility, people often get tripped up because they are totally unaware of what must be done so the trust works as intended.

The Wills, Trusts & Estates Prof Blog recently offered some advice about this important step in "Tips To Estate Planners To Avoid Probate With Living Trusts."

The tips include:

• Trusts can only be used to avoid probate when assets are transferred to the trust. That means that ownership must be transferred from the individual to the trust.
• Some property might be exempt from probate by state laws. Accordingly, it is a good idea to check the laws in your state. For example, if cars are exempt from probate in your state, then there is no need to transfer ownership of them to a trust.
• Retirement accounts do not need to be transferred to the trust. By law they will pass to the named beneficiary. Just make sure that the beneficiary designation is up to date.
• Get advice on trust creation from your estate planning attorney and accountant to ensure all relevant issues are addressed.

An estate planning attorney could be helpful in working through the process.

Reference: Wills, Trusts & Estates Prof Blog (Jan. 9, 2016) "Tips To Estate Planners To Avoid Probate With Living Trusts."

Divorce Decree and Estate Planning Sometimes Don't Mix

There are many possible requirements placed in a divorce decree and requiring a life insurance policy probably isn't at the top of the list but that order can be the cause of lingering resentment for the ex-spouse who is ordered to pay it.

For example, what if one spouse is ordered to pay the other spouse periodic payments? This order may not be for ongoing support but as the best way to make an equitable division of property. Sometimes the spouse who is ordered to pay might also be ordered to take out a life insurance policy and designate the other spouse as a beneficiary. That way if the paying spouse passes away before all of the payments are made, then the life insurance can be used to make the non-paying spouse whole.

A problem with this is that people often try to get around these orders. How? By designating someone else the beneficiary of the life insurance policies and not making any offsetting changes to their estate plans.

Recently, Market Watch answered what happens in those situations in "Can I leave my stepchildren nothing if my husband dies?"

A reader asked Market Watch a question about her husband's life insurance. It seems that as part of the divorce decree from a previous wife he was ordered to maintain a life insurance policy with his children as beneficiaries until those children reached the age of 23. The policy however listed only the new spouse as a beneficiary.

He had no will and the new spouse wondered if she could keep the insurance money or must she give it to the stepchildren if her husband did pass away.

The answer to the woman's question and other similar questions is simple.

The terms of the divorce can be enforced. The children could ask to have the man held in contempt of court and file a claim against the estate for the amount of the life insurance.

A possible solution? If her husband is insurable, then he should take out a new policy and designate her as the beneficiary.

It might be wise to contact an estate planning attorney for advice before proceeding.

Reference: Market Watch (Jan. 12, 2016) "Can I leave my stepchildren nothing if my husband dies?"

The ABLE Act Makes Things Easier

Children with special needs may be covered by monthly Supplemental Security Insurance payments but it generally takes a lot more money than those checks to properly care for the child. This has long created an issue for these parents as they worry about what will happen to their child when the parents pass away.

Parents could not just leave money to the child in their estate plans because that could make the child ineligible to receive SSI. Instead, special needs trusts had to be created by the parents. These were often less than ideal as they could only be created by a parent and required a trustee other than the disabled person to handle the money.

The Achieving a Better Life Experience Act seeks to make things easier.

Recently, the Centre Daily Times reviewed the basics of the Act in "Elder law: Understanding the ABLE Act."

These specifics include:

• A person who became disabled prior to the age of 26 can create and maintain the account for him or herself.
• Funds in the account are not used to determine SSI eligibility as long as they are less than $100,000.
• Account income is not subject to income tax.
• Funds must be used for qualified disability expenses.
• When the account holder passes away, account assets must be used to pay back the government for benefits received unless they are rolled over into the account of a family member who is also disabled.

An estate planning attorney should be consulted for advice on dealing with potential restrictions on ABLE accounts and the possible use of a special needs trust.

Reference: Centre Daily Times (Jan. 9, 2016) "Elder law: Understanding the ABLE Act."

Do Elder Care Disputes Belong in Court?

Siblings have been known to disagree about the best care for their parents even when an elderly person has a general durable power of attorney and a health care power of attorney. These disputes often end up in a court system which is burdened by cases. It can take a long time to resolve the dispute even if it is a minor case.

The Toronto Star reports that the Canadian province of Ontario is considering changing how it handles these disputes in "Elder-care disputes may be moved out of courts."

The idea is to move the disputes out of the court system and have them heard by an already existing administrative board. This board already hears cases regarding whether an elderly person is mentally incapacitated, so disputes about care would seem like a natural fit.

Instead of a long court process, the board must hear cases within seven days of the cases being filed.

While the proposal would certainly resolve disputes more quickly, there are some potential drawbacks.

Parties before the board are normally not represented by attorneys. A quick turn-around time to resolve the disputes might not leave enough time for investigation and to prepare a proper case.

However, if this proposal becomes law, it is certain to be watched closely in other jurisdictions to see if it works out.

Reference: Toronto Star (Jan. 11, 2016) "Elder-care disputes may be moved out of courts."

States Evaluate Importance of Estate Taxes

A dilemma has been presented to state governments facing revenue declines. They can raise tax revenue by taxing the estates of the wealthy but they then risk their own residents relocating to more lenient states before they pass away.

When such citizens move away that means these state governments with estate taxes do not receive income or capital gains taxes from those wealthy people. In the end, such states must determine which taxes are more important to them and their budgets.

Kiplinger's Personal Finance reports in "More States Giving Heirs a Break on Estate Taxes" that the majority of states have chosen to keep their citizens rather than impose an estate tax.

So, how many states still have an estate tax? At present, this number includes only 14 states and the District of Columbia. Tennessee is the latest state to do away with its estate tax and six other states have increased their estate tax exemptions recently.

Although it might be tempting to say this trend is clear evidence that estate tax revenue is not as important as other revenue, there probably is not enough definitive evidence to make that claim. The political controversy surrounding the estate tax might play some role in this trend amongst the states.

It will be worth watching if the states still imposing the tax continue to face pressure to repeal it to keep the wealthy from fleeing to other states in their retirement years.

An estate planning attorney could be helpful in guiding you through these important issues.

Reference: Kiplinger's Personal Finance (February 2016) "More States Giving Heirs a Break on Estate Taxes"

Number of Elderly Facing Poverty May Increase

Healthcare prolonged the average lifespan in the first decades of the 20th Century but there was also a considerable increase in elderly people living in poverty. Policies put into effect in the developing world reversed the trend. In the United States private pension plans, Social Security and convincing people to save for retirement have combined to make elderly poverty relatively rare.

That could change in the near future as the New York Times reports in "An Aging Society Changes the Story on Poverty for Retirees."

There are pressures on all three tools that helped lower elderly poverty.

Fewer and fewer people have private pension plans through their employers. People are not saving as much as they will need for retirement. Perhaps most importantly, an aging population creates stress on Social Security, which relies on current taxes on younger workers to make payments to the elderly. Fewer young workers per every hundred elderly people means there is less money in the system to meet obligations.

It would be a good idea to understand what these changes might mean for your own retirement and estate plans. If you want to leave money to your heirs, you need enough not only for your own retirement years, but also enough to leave in an estate.

An estate planning attorney could give you some insight into this issue.

Reference: New York Times (Dec. 22, 2015) in "An Aging Society Changes the Story on Poverty for Retirees."

Some Pets Left Behind Are Very Wealthy

It has become common in recent years for pets to be included in an estate plan as people focus on distributing their wealth to care for pets as well as human relatives. While generally only sufficient money has been left to care for pets in a modest lifestyle, some have inherited large amounts of money.

Recently, Time published a list of some of these wealthy pets in "The 10 Richest Pets of All Time."

The list includes:

• Gunther III - A German countess left her dog her entire $80 million estate. The trustees of the estate have grown the fortune to $375 million that now belongs to Gunther's child, Gunther IV.
• Toby Rimes - This poodle inherited $40 million when its owner passed away in 1931. However, Toby died a few months later and the estate was divided between various charities.
• Tommaso - This Italian cat was a stray adopted by an elderly woman who left it her $13 million estate.
• Gigoo - A British publisher left his beloved chicken Gigoo a fortune worth approximately $15 million.
• Trouble - Leona Helmsley left her dog Trouble $11 million – although the inheritance was later reduced to a mere $2 million by a judge.

Of course, you do not need to leave a pet anywhere near the above amounts to make sure they are taken care of after you pass away.

An estate planning attorney can guide you in caring for your pets as well as your relatives.

Reference: Time (Oct. 5, 2015) "The 10 Richest Pets of All Time."

Trump's Actions Involving Father's Estate Spark Media Attention

Given presidential candidate Donald Trump’s temperament for blunt, off-the-cuff comments, it should come as no surprise that a challenge to his father's will caused Trump to act out of anger and he is now answering questions about it.

Trump's older brother was not interested in the family real estate business. He instead became a pilot until alcoholism forced him out of the sky. He died from the disease in 1991.

When Trump's father passed away in 1999, Fred Trump III, Donald's nephew from his brother, spoke at the funeral. That night Fred III's child was born with cerebral palsy. Donald Trump pledged that the Trump family would take care of the child's medical needs.

However, when his father's will was read it was discovered that his brother's family was cut out of the will.

Donald Trump had helped create the will.

His nephew's family claimed Donald and his other siblings had unduly influenced their father who suffered from dementia. They challenged the will. This angered Trump and he cut off support for the child with cerebral palsy.

The Daily Mail has more on this story in "Donald Trump admits cutting off medical treatment for his nephew's sick baby after will dispute with alcoholic brother's family."

Undoubtedly this story will be used for political reasons as long as Donald Trump remains a presidential candidate.

There is, nevertheless, a non-political lesson in all of this.

When families feud over estates, the feuds have a way of affecting others, like the medical treatment of a sick child.

Contacting an estate planning attorney could possibly help avoid such issues.

Reference: Daily Mail (Jan. 3, 2016) "Donald Trump admits cutting off medical treatment for his nephew's sick baby after will dispute with alcoholic brother's family."

Social Security Loopholes Closed but Questions Remain

Recently Congress closed a couple of Social Security loopholes included in a larger piece of legislation focused on avoiding default of debts. The loopholes, known as "file and suspend" and "restricted applications," are complex.

What did they do? They basically allowed married couples to accrue a little bit more money out of the system by carefully filing the appropriate paperwork in a specific order at specific times. The majority of Americans did not take advantage of the loopholes either for practical reasons or because they did not know about them.

That these loopholes have been closed does not mean Americans can no longer plan to maximize their potential Social Security income.

This was the point of a recent article in Time entitled "There's One Simple Social Security Strategy You Can Still Take to the Bank."

The strategy suggested is to delay receiving Social Security benefits for as long as you possibly can. The longer you delay benefits, the more benefits you will receive.

On the other hand, many people cannot afford to delay benefits for the maximum amount of time.

When it comes to planning for Social Security it might be wise to consult with an estate planning attorney to help in weighing your options.

Reference: Time (Dec. 31, 2015) "There's One Simple Social Security Strategy You Can Still Take to the Bank."