CA Estate Planning

CAPACITY TO MAKE A WILL CAN DIMINISH RAPIDLY AS YOU AGE!

As medical advances extend human life expectancy, the likelihood that an individual will become incapacitated before dying increases. For wealth planning and conservation purposes, it is critical to assess whether a person has the necessary capacity to execute estate planning documents.  

Making this assessment can be an extremely complex exercise. The standard of mental competence to make a will is, by itself, fairly low: Does the person understand he or she is making a will regarding property he or she recollects owning, and understands that provisions of the will affect her family members who she or he recollects. 

But in addition it must be clear that, despite passing the standard to make a will, it must be determined whether the person is of "unsound mind" or suffers from a "mental deficit" that deprives him or her of the capacity to execute estate planning documents.

Determining whether a person suffers from a "mental deficit" or is of "unsound mind" can be extremely difficult to determine.  This issue was addressed in a recent article in the Journal of Financial Planning titled “Defining Incapacity in the Modern Estate Plan.” The article is based on California law, but if you are caring for an elderly loved one, the message is the same: defining legal capacity can be incredibly difficult.

Much ink has been spilled by lawyers, judges, and family members over the years defining it, too. The biggest teaching point from the article (and my own experience with clients) is to “ink” your own estate plans sooner rather than later. You likely will never again be as sharp as you are today.

Procrastination is the death bed of proper estate planning.

 For more information regarding estate planning, visit my website http://www.grainlaw.com/CaliforniaEstatePlanning.php 

Reference: The Journal of Financial Planning (May 2012) “Defining Incapacity in the Modern Estate Plan”

 

Alzheimer’s Miracle Cure on the Horizon?

In a clinical trial that could lead to treatments that prevent Alzheimer’s, people who are genetically guaranteed to develop the disease — but who do not yet have any symptoms — will, for the first time, be given a drug intended to stop it, federal officials announced Tuesday.

In today’s world, planning for old age can be a challenge- both financially and legally. Additionally, supporting an elderly loved one who is almost certain to be diagnosed with Alzheimer’s becomes even more troubling.

Are you or someone you love at risk for Alzheimer’s in the future? What if the disease could be “cured” before it struck? There may be hope on the horizon, as reported in a New York Times article titled, “New Drug Trial Seeks to Stop Alzheimer’s Before It Starts.”

While nearly two years away from having even preliminary data, researchers have isolated the genetic family bearing the Alzheimer’s blueprint and are working on a new experimental drug that could cure the problem before it strikes millions bearing the offending gene. These breakthroughs take time.

In the meantime, it’s necessary to make financial and legal plans as if the miracle drug won’t come to pass. Accordingly, long-term care financing (e.g., long-term care insurance and/or elder law planning) ought to be considered, along with implementing (or refreshing) your most fundamental legal instruments (e.g., powers of attorney and advance health directives).

As always, consult competent financial and legal counsel before proceeding. This is not a DIY (do-it-yourself) exercise. Too much is at stake.

Reference: The New York Times (May 15, 2012) “New Drug Trial Seeks to Stop Alzheimer’s Before It Starts”

 

 

The Conversation: Mind Your Own Beeswax!

Have you ever tried to talk to your aging parent or parents about finances and been told to: "Take a Hike"," “Just mind your own business," and  "I’ll be fine."  But it may well come your business at some time.

 

Taking care of  elderly parents can be difficult, especially when it comes to talking money, either for their current finances or future planning. Have your elderly parents ever told you to butt out and not worry?

This is a position many adult children with aging parents will have to face. If you’re in this situation (or fear you may be one day) a recent article in Forbes titled Has Your Aging Parent Told You to "Mind Your Own Business"? is worth a read.

For many Depression-era survivors and many baby-boomers, money is an important symbol of control. In addition, for elderly parents who don’t have “enough” money, talking to them about their financial future can be troubling to them. In essence, it disempowers them. Ironically, this is all the more reason it should be discussed (especially if they will be in need of expensive medical care).

As with every dark cloud, there is a silver lining. Discussions about assets can easily segue into revealing concerns over the meaning of money, and the proper disposition of family assets, even a family business.  

In the end, there is a psychology to old age and money. I recommend the original article and the examples therein. Practically speaking, however, your parents might have a point – have you taken care of your own (estate planning) business yet? Perhaps if you have your own house in order, you will have more credibility when addressing these issues with your parents?  

Reference: Forbes (April 17, 2012) “Has Your Aging Parent Told You to "Mind Your Own Business"?”

 

 

 

Qualifying a "sick spouse" for Medicaid when there's a "well spouse"

There’s another layer of rules for families in which the person hoping to get government help paying for long-term care has a spouse who is still living independently. States are treating such “well” spouses in dramatically different ways.

Marriage is a unique economic and legal institution. Indeed, when it works out, marriage also means a happy lifetime of living with another. Of course, because life lasts longer and health wanes differently between persons, those unique economic and legal parts to marriage can translate into difficult times later in life.

Against the backdrop of the in sickness portion of the vows, one difficulty that arises was addressed recently in a Wall Street Journal article titled Long-Term Care and Couples: Who Pays?. That difficulty is the phenomenon of the “well spouse,” the “ill spouse,” and Medicaid.  Practically speaking, if one spouse becomes chronically sick and needs long-term care, will the other spouse be driven into poverty?

Marital assets, whether owned by the husband or the wife, are part of the equation when it comes to determining Medicaid eligibility, especially in California being a community-property state.. Medicaid is the joint federal/state government program to provide means-tested health care assistance to those who qualify.

With both federal and state coffers bleeding red ink (with a few state exceptions), Medicaid money is tight, especially in terms of long-term care coverage -- whether married or single. As the Wall Street Journal article notes, however, some states are treating the “well spouses” more generously than others regarding how much wealth they may retain while the “sick spouses” are receiving taxpayer support through Medicaid.

I recommend reading the original article. Also, consider purchasing long-term care insurance so Medicaid does not become part of your future. In any event, a consultation with a qualified Elder Law Attorney would be prudent to evaluate your options.

Reference: The Wall Street Journal (April 2, 2012) “Long-Term Care and Couples: Who Pays?” 

 

Brooke Astor's Estate is Settled –Changing a Will Late in Life is Suspect, as Astor’s Son Discovers to his Cost.

Brooke Astor’s only son saw his inheritance slashed in half and had his control of the estate’s powerful charitable contributions stripped away as part of a settlement that ended a bitter, five-year dispute over the family’s millions.

Changing your mother’s will in your favor when she is already suffering from dementia may not only lead to a will contest but criminal charges as well. When your mother was the doyenne of New York High Society, Brooke Astor, and the will changes, involving many millions, are all in your favor, you are likely to be in the spotlight not only in New York society circles but also in that of Manhattan’s District Attorney.

That is what happened to Anthony Marshall, Mrs. Astor’s 87-year-old son.  After a 19-day criminal trial resulting in the conviction of Marshall and Mrs. Astor’s attorney for fraud and theft, the contest of Mrs. Astor’s will has been settled without going to a hearing.

Mrs. Astor’s original 2002 will was found in the criminal trial to be her valid will. As part of the settlement forged by Manhattan’s Attorney general, Marshall’s original inheritance was cut in half and his control over influential charitable interests stripped away.  Mr. Marshall now receives a paltry $14.5 million.

Involving at did one of New York’s historically glamorous families, it is not surprising that The New York Times followed the Astor case day by day as many of New York’s society gave evidence against Mr. Marshall.  And the Gray Lady covered the settlement in a recent article titled Settlement in Battle Over Astor Estate Is Reached.

There are many lessons to be learned by estate planners from this case:  Be very suspicious of substantial changes to clients’ estate plans late in life, especially so when the change involves depriving a long-time beneficiary in favor of another.  It is up to the family attorney to scrutinize carefully the requested changes, and especially investigate the client’s state of mind.  Keep scrupulous notes.  If the attorney doesn’t probe deeply, the deprived beneficiary will do so and more than likely contest the will when the estate must be administered.

Reference: The New York Times (March 28, 2012) “Settlement in Battle Over Astor Estate Is Reached”

 

Let your doctor and family know your "end-of-life decisions before it is too late to do so

Contemplating your end-of-life decisions and appointing a health care agent is not something most people want to do.  Yet failure to make those two decisions can lead to conflict, even litigation, between your family, your doctors, and your wishes unexpressed until maybe it is too late to do so. 

In the absence of your clear wishes expressed in your Advance Health Care Directive, the medical profession aims always to preserve life and often your family's fear of loss may be in conflict with your wishes to let go and be allowed to die.

Our culture aimed at preserving life can get in the way and prolong biological life well beyond what is desired by the patient.  Much of modern medical technology used to prolong life in the final months or days is at the expense of the comfort and peace of mind of the dying patient.  Far from improving the quality of life in those final days or weeks, invasive medical efforts do nothing but prolong or worsen the misery of the end of life.

However, if you have made it clear in your Advance Health Care Directive (in California, the living will and appointment your agent are one document) that you do not want heroic efforts made to keep you alive, you may receive palliative care instead which is aimed at making your final days as comfortable as possible. The palliative or hospice care doctor is well attuned to the intentions of their patient and their wishes. 

If the absence of your clear wishes for hospice care, the rest of the medical community and your own family may be less attuned to your wishes; in fact, they may be hostile at best and litigious at worst. Some of these unfortunate tensions were recently featured in an article titled Amongst Doctors, Fierce Reluctance to Let Go on the New Old Age Blog at the New York Times. 

That so much of this rancor can be so easily avoided, I hope it encourages you to contemplate what you would want to happen in such circumstances and then have your estate planning attorney prepare an advance health care directive to communicate yourclear wishes to your primary care doctor and family members well in advance of the need to implement them.

Getting both your doctor's and family "buy-in" to your wishes can save everyone involved much heart-wrenching in those final days, weeks or months.  i encourage you to read the article, sit down and think through your own wishes, then visit your attorney to have your Advance Health Care Directive prepared.  Everyone will thank you for doing so, even if they don't necessarily agree with your decisions.

 Reference: The New York Times -- The New Old Age Blog (March 29, 2012) “Amongst Doctors, Fierce Reluctance to Let Go

 

Whether single, divorced or widowed, many elderly people have no family member to care for them: How about a Care Committee?

Unfortunately for many elderly and single persons the legal system and, perhaps to an even greater extent the healthcare system, are designed around family-based persons. The primary caregiver and decision-maker for so many of our elderly is an unpaid family member, usually an adult child. So, to whom can the single elderly person turn when they have no children?

This is a question that comes up often, but the answers tend to be sparse and inadequate. Enter a relatively new development: the Care Committee. The New Old Age Blog on the New York Times recently addressed this concept in an article titled Care by Consensus.

More likely than not, an elderly person without children turns to friends or other people in his or her life for advice and counsel. These other people serve as surrogate family members. In a sense, that is all a Care Committee is, with the added benefit of legal organization.

Here’s how it works: You ask and appoint members of your Care Committee and task them with carrying out your intentions when you are not able to articulate them yourself. Accordingly, they assume these powers only when you are incapacitated. Think of it as establishing an extended type of living will, or advanced directive. You can even spell out your intentions and simply ask your committee to follow them, or else appoint a guardian or care manager to follow them instead.

It is at least one possible solution for a fairly intractable problem. Nevertheless, committees always have their drawbacks, especially when there are disagreements. Of course, your family members also can (and likely will) disagree at times.

Another practical problem concerns the very friends you would appoint to your Care Committee. Unless they are significantly younger, they may have their own medical care emergencies and concerns, causing you to constantly revise and refine your committee choices.

Nevertheless, forming a Care Committee may be a solid option for an elderly person in the right situation. Certainly, this is an option worth considering. I would commend the original article for your reading. At any rate, if you are considering a Care Committee, be sure to engage competent elder law counsel to help evaluate this option and prepare the proper legal instruments.

Reference: The New York Times (March 21, 2012) “Care by Consensus”

 

If you care for elderly parents or relatives, do you claim available tax breaks?

Taking care of your elderly loved ones is a difficult task. It can be emotionally difficult, as well as financially crippling.

In honor of tax season, SmartMoney offers some related articles about often-overlooked deductions that might help relieve some of your financial stress if you are providing such care. The first article is titled Tax Breaks for Helping Relatives and the sequel article is More Tax Breaks for Supporting Relatives.

For example, the most obvious way to realize some tax relief is to claim your elderly loved one as a “dependent.” In addition, do you pay for medical expenses? If yes, then there is a deduction for that.

As you might expect, the level of support available under the tax code depends on multiple factors, to include the level of support you provide, the support your elderly loved one needs, and even various programs available in your area.

It may be too late for you to pursue tax relief for tax year 2011. However, now is the perfect time to explore your options for tax year 2012 and then plan accordingly.

Regardless, I recommend taking time to read both articles. If this issue does not directly affect you now, it may in the future. 

Reference: SmartMoney (March 7, 2012) “Tax Breaks for Helping Relatives”