CA Estate Planning

Power Of Attorney To Heath Care CAN'T Be Ignored In California

After receiving many calls from clients enquiring whether it was true that their Advance Health Care Directives could be ignored by a hospital, my attention was drawn to an article in the Los Angeles Times (6/13/11) headlined erroneously “Advance Directives Can Be Ignored” 

In her article, the writer frequently uses the term “advance directive” when she actually means “Living Will” which is only one section of a modern California “Advance Directive,” more correctly called an “Advance Health Care Directive”

This interchangeable usage is both misleading and inaccurate.  Californians today have, or ought to have, a modern multi-part Advance Health Care Directive that includes not only a Living Will but also a durable power of attorney for health care.  Every hospital in California is legally bound to accept in its entirety a durable power of attorney for health care. 

The person holding the power of attorney, known as an “agent,” has the authority to make health-care decisions for a patient who is unable to do so for him or herself.  Obviously, a patient under anesthetic cannot direct a surgeon on how to correct an unexpected adverse reaction, which is why a living will may be suspended during surgery,

However an agent can still enforce the patient’s living will if, for example, a hospital ignores a patient’s instruction to take no extraordinary measures to keep the patient alive, either during or out of surgery.  I hope I am right in believing that no California physician would ignore a patient’s wishes, as expressed in an Advance Health Care Directive, without first consulting with the patent’s agent. 

If you are resident in California and only have a “Living Will,” you need to get an Advance Health Care Directive.  You should check with your estate-planning attorney if you don’t have a Directive or one not made within the last few years. 

For more answers to your Estate Planning questions please visit our website. This blog is intended to provide general information only and is purely a public resource (See website disclaimer).

 

 

HOW TO NEGOTIATE LONG TERM CARE

There are some things you just don’t haggle about but, perhaps contrary to what you would guess, it turns out that long-term care isn’t one of those things. Long-term care is expensive, to say the least, but as explained in a recent article in SmartMoney, there are some expenses that may be negotiable.

Nursing homes usually will not negotiate fees, but you may be able to negotiate with assisted-living facilities and home health care agencies.

Start by arming yourself with information. You can look up local costs at Genworth.com/costofcare on a map prepared by Genworth Financial, one of the country’s largest long-term care insurers. This can help you compare costs for various types of care in your area. MetLife offers another source of area-specific information at MatureMarketInstitute.com (click on “Research” then “2010 Market Survey of Long-Term Care Costs.”)

Other resources include “Medicare and Home Health Care” which describes the home health benefits that Medicare covers (available at Medicare.gov) and the United Hospital fund’s “Next Step in Care” website for family caregivers.

Other bargaining strategies to keep in mind:

• As if there is a waiting list at the facility. If not, you may have more room to negotiate.
• While nursing homes generally do not discount rates, you may be able to negotiate for extra amenities.
• If a home-care agency has rates at the higher end of your local market, you may be able to get a lower rate if you let them know you are interviewing several agencies and taking cost into consideration.
• If you hire a home-care agency for a significant number of weekday hours, that agency may be willing to discount any extra fees they charge for weekend work.

For more answers to your Estate Planning questions please visit our website.

ESTATE PLANNING / POWER OF ATTORNEY

When someone asks you to serve as their agent, giving you power of attorney, you may feel quite honored or flattered at first. But after the weight of that responsibility sinks in, you may (and should) have some serious questions. Having power of attorney over another can be an awesome responsibility and may be too great a burden for just one person. For this reason, an individual may choose to select more than one agent to act in their place should they become incapacitated. But two heads are not always better than one.

What do you do if you are one of these agents and, for whatever reason, you and your co-agent(s) just cannot agree? Worse yet, what if you suspect one of your co-agents is not acting in the best interest of your loved one? Conflicts can arise in your attempts to act as “attorney-in-fact.” ElderLawAnswers.com recently updated a short article on the problem with a list of potential solutions.

• First check the wording of the power of attorney document to see if it sets up a procedure for resolving disputes.
• If the power of attorney does not help, contact an elder law attorney, who can tell if your state’s power of attorney laws offer any guidance. There may be a state statute that deals with disputes.

Your final step may be to file a petition in probate court to let the court decide.  The court can arbitrate or, if necessary, find one agent to not be acting in the best interest of the individual in question and so strip them of their power of attorney

For more information on powers of attorney visit our website.

GET YOUR HEALTH CARE DOCUMENTS PREPARED BEFORE APRIL 16th!

National Health Care Decisions Day is set for this coming Saturday, April 16. Preparing your Health Care Documents is one of the most important decisions you need to make, whatever your age. If you were unable to make health care decisions for yourself, who would make them for you?  How would they know what decisions you want them to make for them?

 Get a Health Care Documents, and appoint the people you want to make such important decisions for you!  Let them know what decisions you would make if you were able to yourself!

You can learn more about Health Care Documents –known in California as advance directives --– on our website.

According to their website, this initiative is a collaborative effort of national, state and community organizations committed to ensuring that all adults with decision-making capacity in the United States to document their healthcare decisions.

You also can learn more on their Facebook Page.

BOOMMERS, BEWARE HOW YOU HANDLE THAT INHERITANCE!

According to recent research from The Center for Retirement Research at Boston College, 70% of baby-boomer households will receive inheritances worth a total of $8.4 Trillion. With an average of $300,000 for most inheriting households, and an average of $1.5 million for the wealthiest inheritors, the better part of a generation is expected to see a nice bump in their assets.

 

The question, then, is what to do about it.

 

Ashlea Ebeling of Forbes recently approached the topic with a number of considerations, from warnings to ideas.

 

Consider keeping it Separate. The first thing to take stock of is how your state handles inheritances. California considers an inheritance the separate property of the person who received it, as long as it is kept separate. So think carefully before you put the money into a joint account – or use it to make major improvements on a jointly owned home, for example. Keeping an inheritance separate also can provide a level of asset protection – it can shield it from loss due to your spouse’s debts and/or lawsuits.  If you don’t have a revocable (“Living”) Trust, now may be the time to set one up so as to avoid probate. 

 

Remember, you can usually transfer your inherited separate assets into an existing revocable trust jointly held with your spouse (or with a registered domestic partner in California) or any other person, as long as it is identified as your separate property.  You can also designate in the trust who is to receive the separate property on your death.  It does not have to be your spouse or partner; it could be a child from a former marriage, for example.  To transfer separate property into an existing joint trust, it is advisable to consult an estate-planning attorney to ensure the transfer is done correctly. It is also a good time to review your estate plan, if you have one.

 

Special Treatment for Retirement Assets. If the inheritance is an IRA then you can use it to stretch out the withdrawals over your own life expectancy and in this way maximize the tax benefit on those funds. Don’t try to take the money out and redeposit in your own IRA. That’s not allowed. Instead, the IRA should be renamed. If you want to move it from one custodian to another, do so in a “trustee-to-trustee” transfer. In certain circumstances, you may even want to “disclaim” the account and give it to your children if you don’t need it.

 

Review Your Own Estate Plan. Whatever the inheritance, it is now part of your estate. A sizable inheritance could push you into estate tax territory. Even if you aren’t in danger of estate taxes, you will still want to review your current plan to account for the inheritance assets.

 

In the final analysis, receipt of an inheritance is one of those lifetime events that calls for proper assessment and planning. You can learn more about estate planning on our website. You also can review a checklist of other life events that may alter your estate planning needs on Page 3 of this month’s issue of our estate planning e-newsletter.

 

ESTATE PLANNING: WHY YOU SHOUDN’T AVOID IT

It certainly is understandable that no one enjoys a conversation about death – especially their own! And, with the estate tax exemption now set at $5 million for an individual and $10 million for a couple, many people may believe they have no reason to consult an attorney about their estate planning. But avoiding the topic of estate planning can mean unnecessary expense, confusion and conflict.

SmartBusiness last week highlighted the fundamentals of a “well-thought-out estate plan,” with topics that everyone should consider – whether prince or pauper.

• Why do you need an estate plan? A comprehensive estate plan ensures that when you die your estate is distributed according to your wishes, it protects you in the event of your own disability, and allows you to plan for minor children, pets, and charitable causes.
• What are the basics everyone should have? SmartBusiness (should be hyperlink as above) recommends at a minimum a power of attorney for healthcare and a living will.  In California where I practice law these documents are combined in an Advance Health Care Directive. This Directive is critical should you become ill and unable to make your health care wishes known.   Your appointed health care agent can make sure your wishes are followed.  Also strongly recommended is a Power of Attorney for Finances and Personal Affairs.  This allows whoever you appoint to pay the mortgage, utilities and take care of your cat if you are unable to do so for yourself.  In my experience, people in hospital without such a Power, are often more worried about such matters than their illness! 
• What about a will? Absolutely, you should have one, otherwise the State where you live will distribute your estate according to its probate rules, which may not reflect your wishes.  You certainly can write your own will and there are many online sites to help you do so! However, as in most things of life, you do get what you pay for. Improperly drafted or last-minute, hand-written wills are frequently contested and invalidated in court. If you don’t know what you’re doing, the outcome could be much different than you expect.
• What about trusts? Many people choose to create trusts to help their heirs avoid the time, expense and lack of privacy in probate proceedings.  A trust can help reduce estate taxes if applicable to you,  Trusts also can help shield assets from spendthrift children, divorce, children of a second spouses, and other unforeseen circumstances, such as lawsuits against your heirs.
• What mistakes to people tend to make in estate planning? The writer points out two common mistakes: failure to plan for their personal effects which can lead to more family disputes than the distribution of money, and failure to review and update estate plans over time.

You can learn more about comprehensive estate planning in the Grain Law FAQ's section of our site.

 

PROTECT YOUR CHILDREN FROM SQUANDERING THEIR INHERITANCE. INCLUDE A CHILD’S TRUST IN YOUR ESTATE PLAN.

Many parents are concerned that their children or grandchildren might squander their inheritance if they receive it when they are too young to appreciate its value.  It is therefore not uncommon to put such inheritances into children’s trusts to limit the age at which the child receives the capital outright, and sometimes even limits the income paid to them.

It is quite common now for a child to receive an inheritance in three stages: at age 25, 30 and 35.  A trustee appointed for the purpose, usually has a wide discretion whether to make advance payments out of the trust’s capital where circumstances suggest it is right to do so.  For example, if a child is married and wants to buy a house before the trust is due to make a payment of capital outright, the trustee can decide to distribute the down-payment on the house.

Often, the trustee has the discretion to distribute all the funds outright if he or she considers the child is mature enough to manage a large sum of money.  Other times, a child might be appointed co-trustee of his or her trust, or even replace the original trustee at a certain age.  There are often advantages in leaving a child’s inheritance in trust for life.  This can provide many protections, for example if the child divorces, the ex-spouse cannot access the trust fund in a divorce settlement.

There are other strategies to consider if the estate is over the estate tax exclusion (currently $5 million, and $10 million for a married couple). The greatest inheritance protection is achieved when the estate plan creates a Long-Term Discretionary Trust to administer the inheritance for the children. Such an arrangement can make both income and principal available to the children for their health, education, maintenance and support, as well as for any purpose deemed appropriate in the discretion of your appointed inheritance managers. This can have favorable estate tax consequences.

You can learn more about Long-Term Discretionary Trusts and other estate planning strategies in the July issue of our estate planning newsletter, Majoring in Minor Children (this link is to Kyle’s website.  We should have the same newsletter on our site). Be sure to sign up to subscribe to our free monthly e-newsletter, which is full of estate planning tips for you and your family (ditto).

Call (877)-858-4724 or Email richard@grainlaw.com to schedule your free consultation today.

 

ARE YOU, YOUR FRIENDS OR CLIENTS IN A CALIFORNIA REGISTERED DOMESTIC PARTNERSHIP? THEN READ ON.

If you are in a California registered domestic partnership (RDP) you should know about a little-publicized IRS announcement last year. Starting with 2010 Tax Returns, the IRS will treat 2010 income earned by both partners in an RDP* as community property, thus applying the “income-splitting” rules until now only applicable to the community property of different sex couples. 

Mandatory for 2010, the IRS requires that all income earned by both RDP partners treated in California as community property must now be added together and allocated equally to each partner’s federal tax return.  Unlike different-sex couples, RDPs must continue to file separate federal tax returns.

This could have a major impact on the amount of income tax owed by the individual partners.  It makes the preparation of 2010 federal tax returns for RDPs even more complex than before requiring a tax professional with experience in preparing LGBT tax returns to determine how the new IRS position will affect them. For CPAs in Los Angeles known to have experience in preparing LGBT returns, visit the following websites (David Paddock’s and William Hurtt’s websites)

It should be noted that the change in treatment only applies to community property and not the separate property of each party.  Determining what is separate property is not always an easy task, and an attorney or tax professional should be consulted where classification is difficult. 

As a consequence of the new IRS treatments, LGBT couples contemplating registering as domestic partners may want to consider beforehand whether they should enter into a pre-partnership agreement to have their incomes treated as separate income if registration would have a negative impact on their tax positions.  For those RDPs who are greatly affected by the new IRS rules may want to consider a post-partnership agreement, although they raise several critical issues. 

For more information on such agreements, contact Richard Grain, an attorney focusing on the LGBT community, at richard@grainlaw.com.

* NOTE: the new IRS position although it does not mention them will probably apply to California same-sex married couples as well.

 

IF YOUR CHILDREN WON’T LISTEN TO YOU PERHAPS THEY’LL LISTEN TO AMERICAN EXPRESS!

There is an old saying that can be painfully true, “You are only as happy as your unhappiest child.” One of the most common laments I hear from parents of adult children is that, for whatever reasons, their offspring seem to (repeatedly) need financial assistance … not because of illness of hardship, but simply through poor decision-making.

It’s hard to talk-turkey with your adult children, and they seldom listen anyway. But, maybe they will listen to advice from a third-party, especially if that advice is delivered in a manner with which they are most comfortable – fresh, fun and online.

American Express has launched Currency (www.getcurrency.com) to provide just that type of advice.  They offer online “courses,” and even a new iPhone app, Social Currency for social networking. A recent hot topic: Currency 101: What is “Spending”?

Some of other course topics include Buying Your First Home, Get a Handle on Your Taxes, and Managing Student Loans.

But if your adult children still keep on coming to you for “loans” there are two estate planning steps you can take that might discourage them for “freeloading” of you:

(a)  Make provision in your trust that any loans will be deducted from their share of your estate on your deaths

(b)  Set up a spendthrift trust which can limit their access to their share of your estate by providing for payout to be at the discretion of a third-party trustee.

And if neither of those deterrents are effective, well stop giving them loans or make them sign promissory notes for the loans.  It’s called “tough love”!

 

For more information regarding spending advice and planning that can ensure your family is taken care of, while still responsible with their money, visit us here to set up a FREE consultation.