Wood + Lamping - Mark Reckman - Estate Planning / Elder Law: Recent Episodes
Joe Strecker Productions
Mark Reckman has been with Wood + Lamping since 1979 and has served as the head of the Real Estate and Probate Practice Areas as well as managing partner of the firm.
Currently, Mark’s practice spans Medicaid, estate planning, probate, real estate, and small business. Mark is a founding member of TriState Care Partners, which is a referral network of Cincinnati health care providers dedicated to enabling seniors to age in the place they call home.
Since 2006, Mark has been selected annually for inclusion in Ohio Super Lawyers®. Mark was recently selected by his peers for inclusion in The Best Lawyers in America© 2014. He has been named one of Cincinnati's "Leading Lawyers" by Cincinnati Magazine annually since 2007. Mark was also a member of Class XI of Leadership Cincinnati. In 2017, Mark received an award from the PLAN Southwest Ohio committee. PLAN is a non-profit whose mission is to serve those with serious disabilities. Mark has been involved in their initiative since their inception.
Mark appears biweekly on the 55KRC radio show Simply Money and enjoys travel, tennis, and scuba diving.
What Are Estate Taxes?
I. What is the Death Tax?
· There has been a lot of talk this week about the Trump Tax Bill, what is in it, what’s included, and in my practice this always conjures up talk about the death tax or the estate tax.
· The estate tax is a tax assessed on the total value of your assets which transfer at death to heirs or beneficiaries.
· As of 2025, the estate tax only applies for estates worth more than $13.99 million per individual, or $27.98 million for married couples who elect portability upon the death of the first spouse’s death.
· You can leave an unlimited amount of assets at death to your spouse without incurring estate taxes. However, this means that the estate tax exemption is wasted upon the death of the first spouse. Portability permits the transfer of this unused estate tax exemption to the surviving spouse creating a $27.98 million estate tax exemption for the surviving spouse in 2025.
· If you have an estate that exceeds this threshold, the excess is taxed at rates up to 40%. · If you have an estate worth $15 million, only $1.01 million above the exemption is taxable. · However, this high exemption is currently temporary. Unless Congress acts, it’s set to sunset to approximately $7 million per person starting in 2026, subjecting more estates to the estate tax. · Under the Biden Administration, there was discussion of reducing the estate tax exemption to $3.5 million. Under the new Trump Tax Bill proposal, there is discussion in making the exemption $15 million per individual in 2026 and making the exemption permanent.
· Therefore, we are in this waiting period on how new estate tax legislation will affect estate planning going forward.
II. State Estate Taxes and Inheritance Taxes
· There are some states which impose their own estate taxes and inheritance taxes.
· Unlike estate taxes, which is paid by the estate, inheritance taxes are paid by the persons inheriting the assets.
· Kentucky inheritance tax can reach as high as 16%, however, close family members, such as spouse, children, grandchildren, siblings, are exempt from the inheritance tax.
· It is important to watch out for inheritance taxes if your state has an inheritance tax which applies.
III. How Do You Limit Estate Taxes
· There are ways to limit estate taxes when your estate may be subject to estate taxes. · Lifetime Gifting
o You can gift up to $19,000 per person annually without touching your lifetime exemption.
o You can gift $13.99 million in taxable gifts during your lifetime. However, every taxable gift you make, reduces your lifetime exemption from the estate tax, so you need to be careful.
o A couple could gift $38,000 to each child or grandchild every year
· Irrevocable Trusts
o Transferring assets to an irrevocable trust can remove those assets from your taxable estates
o One such option is with an Irrevocable Life Insurance Trust
§ This is a trust in which the death benefit that pays upon your death will be owned by the ILIT.
§ This can provide a cash free benefit for your beneficiaries named in the trust. However, it can also be used to provide liquidity for anticipated federal estate taxes.
§ I have represented many family farms in the past, and the issue in those situations are that the estate will be taxable, but there is very little liquid assets. The surviving family would not want to sell the farm just to pay the taxes. This is where an ILIT can be very beneficial.
· Charitable Giving
o Donating to charities through your estate reduces your taxable estate and can offer income tax deductions.
o Charitable trusts to benefit both a charity and your heirs can be especially beneficial
IV. How to Plan in 2025
· With the federal exemption set to be cut in half and no idea when Congress is going to act, 2025 is a critical year to act and engage in estate tax planning.
· Portablity lets the surviving spouse inherit the deceased spouse’s unused estate tax exemption.
· However, you must file an estate tax return to claim it.
· Higher net worth families might lock in the current $13.99 million exemption before it shrinks with a Spousal Lifetime Access Trust
· Don’t forget to review your plan annually – asset values can grow faster than you expect, pushing you over exemption limits.
Why is estate planning a necessity for everyone over 18, not just the wealthy, and learn how to safeguard your assets and ensure your wishes are honored. We explore the critical components of estate planning, including the last will and testament, trusts, power of attorney, and healthcare directives. Dan shares real-world examples to highlight common pitfalls, such as neglecting to update plans after major life changes, which can complicate probate and lead to legal challenges. Regular reviews of your estate plan every three to five years are key to keeping everything aligned with your current life situation.
Dive deeper into the world of trusts, especially their role in Medicaid and tax planning. We discuss the importance of setting up and funding a trust well before applying for Medicaid, ideally five years in advance, to protect your assets. Dan also sheds light on the strategic use of irrevocable trusts for larger estates and the significance of "see-through" language to secure tax benefits for IRAs and 401(k)s beneficiaries. With these insights, you'll be well-equipped to navigate the complexities of estate planning and ensure your goals are met, making this a must-listen episode for anyone looking to secure their financial future.
I. Have you ever wondered what happens to your assets and property after you pass away? ·
After you pass away all the property that you own and the debts that you have must be administered through a public court process called probate. ·
The word probate actually comes from the Latin word, as us lawyers always have to use Latin phrases, “to prove.” ·
You see, for the title to your property (whether that is real estate, your car, your bank accounts, etc.) to change to your heirs and family, a probate process must occur.
II. What is probate? ·
As I mentioned, before title to property can change to your family, that property must be administered through a process called probate. ·
Probate is a public court proceeding in which all of your assets, property, and debts are listed in public court documents. ·
There are a number of public court pleadings (i.e., inventory of assets, accounting, etc) which are filed with the court, as well as a number of court hearings that occur. ·
At the end of the court proceeding, the assets which remain are distributed to your family members either according to the will or according to state law, after all valid debts have been paid. ·
Example: o Imagine for a minute Jane, who passed away with a house and bank accounts. In order for Jane’s children to receive the house and bank accounts, Jane’s children had to go through probate before those assets could be transferred. ·
Many people think that if you have a will you do not go through probate. However, that is not true. Whether you have a will or not, your property will need to be administered through the probate court process.
III. Why does probate exist? ·
Probate Court to ensure debts are paid and assets are distributed either according to law or according to a person’s last will and testament.
Probate court is there to make sure that if a person leaves a last will and testament, that the will is determined to be valid according to law. Remember the word probate I mentioned early is Latin for the phrase “to prove.” Well, the will needs to be proven to be legally valid. ·
Probate court is also there to settle any disputes and disagreements among the heirs or beneficiaries
IV. “I hear probate is bad?” ·
Probate is time-consuming. This means that there will be delays for asset distribution to heirs or beneficiaries of the estate. ·
The average probate case can last anywhere from 6 months (more likely a year) to two years or more. ·
Even if you have a will, the will must be admitted to probate. ·
The executor that you name in your will has no power until the will is admitted to probate and the executor is given authority by the court to act on behalf of the estate. ·
Probate is also costly. Court costs, attorney fees, and executor fees can add up quickly ($15,000 or more even for simple estates is not unheard of). ·
Probate is also a public process. Every asset you own and debt that you have will be listed on a public court document than anyone can look up regarding your probate estate.
V. Should you avoid probate? ·
Having practiced as an attorney since 2011, I have seen both simple estates and complex estates go through the probate court process. In nearly every case, my clients have said:
o This took a long time
o This process was extremely expensive
o I wish mom or dad knew how to avoid this ·
In general, I have found that families which plan to avoid probate enjoy a simpler estate settlement process than those who go through probate
VI. Ways to avoid probate ·
Joint Ownership
o Any assets held jointly with right of survivorship will not go through probate.
o Instead those assets will immediately go to the surviving joint-owner
o Think, real estate owned by a married couple with right of survivorship. The surviving joint owner takes full ownership outside of probate.
o The same can be true for jointly held bank accounts ·
Beneficiary Designations
o Designating beneficiaries on your investment accounts, retirement accounts and life insurance can ensure that those assets do not go through probate as well.
o Those assets pass to the named beneficiary outside of probate. ·
Living Trusts
o Living trusts are a way to avoid probate as well.
o I would say that most of my clients prefer to establish a living trust.
o A living trust is a legal document and entity in which a person (called a grantor or settlor) establishes a legal entity known as trust and transfers their property to be managed by another person (called a trustee) until a predetermined event, usually the death of the grantor or settlor.
o Upon death, because the property was managed by the trustee, the property is transferred to the beneficiaries, not through probate, but according to the terms of the trust.
o Also, in most circumstances, the grantor or settlor is also the initial trustee. Therefore, day to day, nothing really changes. You continue to access and manage your property as you always have.
o The only difference is that upon your death, a successor trustee, usually a spouse or an adult child, will step in and distribute the property to the beneficiaries named in the trust agreement.
o Trusts can also distribute property in ways that a will and probate cannot:
§ A trust can delay distribution to children and family members
§ Let’s say you have concern regarding an adult child’s spending or other issues. You can delay the distribution to that child over time as a way to protect their inheritance.
§ Or, let’s say that you have minor children – a trust can ensure that the successor trustee manages the trust property. If the property was distributed to minor children outright through probate court, your surviving family would have to go to probate court and establish a guardianship over that minor child or children until that child reaches the age of 18.
You can go online and craft a Will for $100 or less – sometimes a lot less.
AARP writes on this subject all the time. But they make it clear that online
Wills are only for the most basic circumstances.
So, if you have a small estate and want to leave everything to your spouse
and then to your kids, an online Will works – IF you fill it out and execute it
correctly.
But, what kinds of issues make online Wills risky?
A. Minor children
B. Second marriages
C. Medium size estates and larger
D. Disability – of the testator or the beneficiary
E. Real estate in more than one state
F. Children with “issues” such as poor money skills, bad spouses,
poor judgment, drug and alcohol abuse, big debt, bad health
G. Significant “non-probate” assets
H. Planning for one’s own disability
I. “Legacy” assets, including family cottage
J. Family business.
Beneficiary Designations.
Executing a Will is only one part of an estate plan. You also need to
consider:
A. Power of Attorney
B. Living Will
C. Power of Attorney for Health Care
D. Beneficiary designations.
I have never met a client who didn’t believe his/her estate was simple
– most were mistaken.
How Specific Should Your Will Be?
I. Most Wills are general in nature. The same is true of Trusts. Many clients are surprised by this. They expect a Will to list certain assets to go to certain people – at least the big things.
II. There are two kinds of gifts:
a. Specific bequests
b. Residual bequests.
III. Specific bequests come in two types:
a. The bequest of specific assets such as a house, stock, jewelry, car, household goods, etc. For example, “I give all my jewelry to my daughter, Kay Smith.”
b. The bequest of a specific amount of money such as giving $50,000 to my son or giving $10,000 each to my grandchildren.
IV. Residual bequests address what is left after the cost of administration and after specific bequests.
For example, “I give the rest and residue of my estate in equal shares to my children,”
or “I give 20% of my residual estate to the University of Cincinnati, 40% to my son Brent, and 40% to my son Eric.” Of course, it must add up to 100%
V. Most Wills have both specific bequests and residual bequests. Most Wills say:
a. Pay the administrative expenses.
b. Pay my bills.
c. Pay my taxes.
d. Give my household goods and personal effects to my children to be determined by my executor.
e. Give what is left equally to my children in equal shares.
VI. It is not uncommon to add one or two specific bequests:
a. I give $5,000 to each of my grandchildren.
b. I give my jewelry to my two daughters.
c. I give $100,000 to Cincinnati Children’s Hospital.
It is important to specify what happens if a beneficiary dies before you do. What happens to that gift – does it go to their spouse or children, or does it lapse (get cancelled)? Also, remember is that specific bequests come before residual bequests. So, if the specific bequests use up all the assets in the estate, nothing goes to the residual beneficiaries.
VII. Many clients think we should list assets in the Will or Trust. But, there are a few reasons that we do not:
a. If my Will gives 100 shares of P&G to my son and I don’t own that stock when I die, what happens? In Ohio, that gift is cancelled.
b. It is a mistake to assume that an asset means the same to a beneficiary as it does to us. If a beneficiary really wants something specific from the estate, he/she can buy it from the executor. Don’t “saddle” your values or your sentiments on your beneficiaries.
c. Itemizing assets may trigger an appraisal and effect estate taxes.
d. We don’t want to amend your Will every time your assets change.
VII. Some experts suggest that itemizing assets in your Will reduces family conflict. I don’t agree. If families want to fight, they are going to fight. The terms of the Will can affect this, but not by itemizing assets. Alternative: Make a “private” list to give to the Executor. This is easy to change. The Will should give the Executor broad power and discretion. Pick the right Executor and trust them to work it out. Don’t tie the hands of your Executor or beneficiary.
Unlock the secrets of estate planning and learn how to protect your family's future with insights from Simply Money and our special guest, expert Mark Reckman from Wood and Lamping. Discover the intricacies of Anthony Bourdain’s estate, where smart planning led to the creation of a trust for his daughter, effectively sidestepping the probate process. Yet, his choice of an estranged wife as trustee serves as a cautionary tale about the importance of selecting a reliable trustee. Listen as we dissect the complex world of assets, including the unexpected significance of frequent flyer miles, and how they can play a role in your estate plans.
Join us as we explore estate planning as a profound gesture of love for those you hold dear. Through the lens of Paul Newman's personalized approach and the strategic application of the Wagner Rule, we highlight the necessity of bespoke planning that fits unique family dynamics. With Mark Reckman’s expert guidance, we emphasize the critical nature of having a well-crafted estate plan to secure the future of your loved ones. Elevate your understanding of managing trusts and learn valuable lessons from the “Death Styles of the Rich and Famous” that can be applied to your own life.
Unlock the secrets of estate planning beyond the basics and learn how to protect your healthcare wishes in our latest episode featuring Mark Reckman from Wood and Lamping. With Mark's expertise, we shatter common myths about living wills, durable powers of attorney, and healthcare directives, revealing how these documents are crucial for navigating the complexities of medical care during terminal illness. Discover the truth about living wills and the dedicated commitment of healthcare professionals to patient care, ensuring that your decisions are honored when you're unable to voice them yourself. We also tackle the vital constitutional right to die, emphasizing the consistency of these rights across the tri-state area.
Navigating family dynamics in healthcare decisions can be challenging, but it doesn't have to be. Join us as we highlight the emotional and ethical intricacies families face without prior guidance about their loved one's healthcare preferences. Mark Reckman brings valuable insights into why discussing advanced healthcare directives is an act of love, alleviating the emotional burden from family members who might otherwise rely on assumptions about a patient's values. We stress the importance of appointing a reliable healthcare proxy, someone who can make impartial decisions when it matters most. Tune in to ensure that your healthcare wishes are respected and that your loved ones are spared from the agony of guesswork.
Estate planning expert Mark Reckman from Wood and Lamping joins us to share his remarkable insights from serving on a jury in a criminal drug case. Offering a rare peek into the jury room, Mark explains the crucial differences between grand and petit juries, while also shedding light on how the presence of jurors often nudges parties toward settlements. His personal experience underscores the diversity and dedication of those called to serve, emphasizing jury duty not just as a civic obligation but as a fundamental pillar supporting the rule of law in the United States.
In the heart of Southwest Ohio, jury duty may initially seem daunting, yet it stands as a significant opportunity to engage with the justice system. We focus on how jury commissioners strive to make the process efficient and rewarding. Discover why this civic responsibility is not just about fulfilling a duty but about actively contributing to the legal foundation of our democracy. Through Mark Reckman's perspective, listeners are encouraged to embrace this summons as a chance to uphold justice and witness firsthand the intricate workings of our courts.
Unlock the secrets to a secure and prosperous retirement with insights straight from estate planning expert Mark Reckman of Wood and Lamping. Master the intricacies of Social Security claiming strategies, and learn how to make informed decisions that could significantly impact your financial future. With almost 75% of retirees opting to stop working before 65, we dissect the vital choice of when to claim Social Security benefits. Mark clears up common misconceptions, such as the false notion that early claims will automatically increase to full benefits at full retirement age, and addresses the often misunderstood concerns about the program's solvency.
Together, we explore alternative strategies to help you make the most out of your Social Security benefits, emphasizing the advantages of delaying claims to increase your future payouts. Consider options like part-time work, applying for disability benefits, or adjusting your budget to rely temporarily on savings. With Mark's seasoned advice, you'll gain clarity on navigating these options to tailor a retirement plan that fits your unique financial situation. Don't miss this episode filled with invaluable guidance—your retirement could depend on it!
Seven Ways to Divide up Your “Stuff”
Clients ask me all the time how much detail should go into their Wills.
They are usually referring to their “stuff” – their personal possession such
as furniture, art, household goods, car, etc. Well, the answer is that we
don’t usually itemize those things in your Will – except for those rare
pieces. This is for a whole lot of practical reasons and tax reasons. That
often is not enough for folks, so typically estate lawyers offer these
alternatives. The attorney puts a paragraph in the Will that says the
Executor will decide who gets what. Then, the Executor can use one of
these methods:
-
LIST LARGE GIFTS IN YOUR WILL. Be selective and keep
this to a minimum. There are practical problems with this one. -
SELL EVERYTHING AND SPLIT THE MONEY. This is the
great equalizer but is a little harsh. -
WRITE A MEMO TO YOUR EXECUTOR. This is by far the
most popular. It’s simple, effective and easy to change. -
GIVE THINGS AWAY WHILE YOU ARE ALIVE. I love this
one because it can simplify your life and bring you joy. And it
comes naturally as you downsize. -
HAVE A LOTTERY OR TAKE TURNS PICKING. This is also
effective, but it requires everyone to be together or it will take
forever. -
BIDDING. You can bid with real money, but usually you bid
with chips or play money or points. But this requires everyone
to be together to work correctly. -
COLOR-CODED STICKERS. You put stickers on the big
pieces so that your family and your executor know who gets
what. This is a little compulsive, and you have to live with
stickers on your stuff – but it works.
Roughly 6 million Americans suffer from one or more dementia symptoms. 10% of folks
over 85 have dementia. This is expected to rise to 14 million people by 2050.
Profile of Potential Target:.
- Dementia symptoms
- Easily influenced by others
- Lives alone (isolated)
- Lonely
- Recent loss of family member
Forms of Abuse:
1. 1. Forging checks or forcing victim to sign checks
2. 2. Forcing victim to sign a deed, will, trust or POA
3. 3. Stealing property
4. 4. Promising lifelong care in exchange for money
5. 5. Using property without payment or permission
6. 6. Phone scams
7. 7. Mail scams
8. 8. Internet scams
9. 9. Self neglect
Indicators of Abuse:
1. Changing mailing address on financial reports/statements
2. Large withdrawals
3. Unpaid bills
4. Substandard care
5. Perpetrator spends too much time with victim
6. Perpetrator shows too much interest in money matters
7. Missing belongings
8. Limiting visitation by family and friends
9. Investing in sketchy business ventures
10.Late life marriages
Duty to Report:
1. Last year, Ohio passed a new law that creates a duty for lawyers, doctors, social
workers and mental health professionals to report suspected abuse
2. Reports are investigated by Ohio Adult Protective Services (1-855-OHIO-APS)
3. Reports are kept anonymous
SEASON OF GIVING
Each year about this time, we pause to talk about the upcoming Holiday season.
This season is about family and friends. It’s also about recognizing others and giving
thanks for what we have. And it is a time to think about folks who are less fortunate.
That brings us to today’s topic: GIFTING.
Broadly, there are two types of Gifts:
- Gifts to individuals (usually family); and
- Gifts to charity.
A. Gifts to Individuals
- Gifts can consist of anything – cash, stocks, bonds, real estate, jewels,
cars, etc. Tax law treats all gifts the same way. - Gifts can be made during your life (intervivos) or at your death
(testamentary). Tax law treats both types the same way. - Lifetime federal gift tax allowance for 2024 is roughly $13.6 million dollars
per person ($27.2 million per couple). There is no longer a state gift tax in
Ohio (since 2013). -
The annual exclusion amount for 2024 is $18,000 per recipient. Gifts
under that amount are not reportable to the IRS and do not reduce your
lifetime allowance. Next year, people are predicting that exclusion will go
up to $19,000 per person, per year. -
Gifts are not taxable income to the recipient.
- Gifts and cost basis (“cost basis” is the price you paid to buy the
investment):
a) gifts made during life: the person receiving the gift assumes the cost
basis of the person making the gift.
b) gifts made at death: The cost basis of the gifted asset is “stepped up” at
the date of death.
B. Gifts to Charity.
Charitable gifting dropped in 2022 – for only the 4th time in 40 years. It dropped
by about 3.5%. Nationwide, gifts to charity were just under $500 billion in 2022 that
rebounded to $557 billion in 2023.
Gifts to charities pre-approved by the IRS can be deductible on your 1040 up to
60% of your AGI, but, in many cases, 20%, 30%, or 50% limits can apply. Gifts to
charities made at your death, are deductible on your estate tax return – without
limitation.
There are over 1.5 million “approved” charities. Most donations are made to
religious charities. Education and human services are a distant second and third place.
Fastest growing category is to Foundations.
When making a testamentary gift, consider using qualified funds. This avoids
both estate tax and income tax on that money.
Consider this idea to build charitable giving into your family’s “culture.” When the
kids/grandkids get a little older, put some portion of the money used to buy gifts into a
“pot.” Everybody contributes. Then, convene a family meeting and make a joint
decision to give it to a charity or list of charities. Not only does this “teach” charity to the
next generation, it will give much greater meaning to the Holiday Season. It also
reinforces family values. And, believe me, the kids in the family learn from this.
It’s not easy – it’s not hard – it’s somewhere in between. It’s making choices/decisions.
A. Broad Duties of an Executor:
- Follow instructions in a Last Will and Testament.
- Hire professionals.
- Work with family.
- Pay taxes and bills.
- Distribute assets.
B. Specific Duties of an Executor:
- Find the Will and Review its contents
a) Locate and review the Will with a lawyer.
b) Determine if probate is necessary.
c) File the Will with Probate Court.
d) Notify beneficiaries. - Secure Assets:
a) Insure valuables or property.
b) Conduct an inventory and get an appraisal, if needed.
c) Determine if there are any non-probate assets included in the estate (such as trusts). This is property that can be transferred outside of the Probate Court. Example: life insurance, TOD/POD assets, retirement accounts, joint and survivor assets.
-
Manage Finances:
a) Cancel credit cards, bills and subscriptions.
b) Freeze accounts and terminate contracts.
c) Inform banks, brokers, landlord, tenants, doctors/health care professionals, post office, Social Security Administration and employer/employees of the testator’s passing.
d) Open estate account.
e) Collect benefits or outstanding payments.
f) Give notice to creditors and determine if claims are valid.
g) Sell assets or property if necessary.
h) Pay outstanding debts (including funeral costs). -
Close the Estate:
a) File a final account with Probate Court and beneficiaries.
b) Pay the attorney.
c) Pay the executor. -
Disperse the Remaining Assets According to the Will:
a) Protect all assets until they are ready to distribute.
b) Donate to organizations or charities if called for.
c) Deliver gifts to individuals named in the Will.
d) Divide remaining estate among beneficiaries as specified in the Will.
When Should You Update Your Estate Plan?
Once you have created an estate plan, it is important to keep it up to date. You will need to revisit your plan after certain key life events, including marriage, the birth of children, divorce or the death of a spouse, and a significant increase or decrease in assets. Here’s why.
Marriage.
Whether it is your first or a late marriage, you will need to update your estate plan after you get married. A spouse does not automatically become your heir once you get married. In Ohio, without a Will, your spouse would get one-third to one-half of your probate assets. The rest will go to other relatives. You need a Will to spell out how much you wish your spouse to get. Your estate plan will get more complicated if your marriage is not your first. You and your new spouse need to figure out where each of you wants your assets to go when you die. If you have children from a previous marriage, this can be a difficult discussion. There is no guarantee that you
leave your assets to your new spouse, he or she will provide for your children after you are gone. There are a number of options to ensure your children are provided for, including creating a trust for your children, making your children beneficiaries of life insurance policies, or giving your children joint ownership of property. Even if you don’t have children, there may be family heirlooms or mementos that you want to keep in your family.
Minor Children.
Once you have children, it is important to name a guardian for your children in your Will. If you don’t name someone to act as guardian, the court will choose the guardian. Because the court doesn’t know your kids like you do, the person they choose may not be ideal. In addition to naming a guardian, you may also want to set up a trust for your children so that your assets are set aside for your children when they get older. Similarly, when your children reach adulthood, you will want to update your plan to reflect the changes. They will no longer need a guardian, and they may not need a trust. You may even want your children to act as executors or hold a power of attorney.
Divorce or Death of a Spouse.
If you get divorced or your spouse dies, you will need to revisit your entire estate plan. It is likely that your spouse is named in some capacity in your estate plan – for example, as beneficiary, executor, or power of attorney. If you have a trust, you will need to make sure your spouse is no longer a trustee or beneficiary of the trust. You will also need to change the beneficiary on your retirement plans and insurance policies.
Increase or Decrease in Assets.
One part of estate planning is estate tax planning. When your estate is small, you don’t usually have to worry about estate taxes because only estates over a certain amount, depending on current state and federal law, are subject to estate taxes. As your estate grows, you may want to create a plan that minimizes your estate taxes. If you have a plan that focuses on tax planning, but you experience a decrease in assets, you may want to change your plan to focus on other things.
Other.
Other reasons to have your estate plan updated could include: ·
You move to another state; ·
Federal or state estate tax laws have changed; ·
A guardian, executor, or trustee is no longer able to serve; ·
You wish to change your beneficiaries; ·
It has been more that five years since the plan has been reviewed by an attorney.
Contact your elder law attorney to update your plan.
SIMPLY MONEY September 2024 WHAT ARE THE CAPACITY STANDARDS FOR SIGNING LEGAL DOCUMENTS?
ELDER LAW ATTORNEYS ARE OFTEN CALLED UPON TO DETERMINE IF A CLIENT HAS THE LEGAL CAPACITY TO SIGN CERTAIN DOCUMENTS. HOW DO THEY MAKE THAT CALL? WELL, THE TESTS ARE DIFFERENT FOR DIFFERENT THINGS. WHEN CONFRONTED BY THE PROSPECTS OF A GUARDIANSHIP, THE TEST IS IN THE STATUTE:
CAN A PERSON MANAGE HIS/HER AFFAIRS OR THE AFFAIRS OF A DEPENDENT?
THAT IS A VERY BROAD AND VAGUE TEST. THE COURT USUALLY LOOKS FOR CLUES THAT A PERSON IS AT RISK FOR PHYSICAL HARM OR FINANCIAL LOSS. THE COURT ALSO RELIES ON A PROFESSIONAL ASSESSMENT BY A DOCTOR OR MENTAL HEALTH PROFESSIONAL. THE LAW PRESUMES THAT WE ARE COMPETENT UNLESS PROVEN OTHERWISE BY CLEAR AND CONVINCING EVIDENCE. ONLY THE COURT CAN MAKE THAT LEGAL FINDING.
BUT THE TEST IS DIFFERENT FOR SIGNING DOCUMENTS.
I. SIGNING A WILL:
CALLED TESTAMENTARY CAPACITY. THIS TEST REQUIRES THE PERSON SIGNING TO BE FREE OF DELUSION AND TO:
1. UNDERSTAND THE NATURE OF HIS/HER PROPERTY
-
UNDERSTAND HIS/HER RELATIONSHIP TO THOSE WHO WOULD BE HIS NATURAL BENEFICIARIES
-
LEAVE HIS PROPERTY IN A MANNER CONSISTENT WITH 1 AND 2 ABOVE
-
BE ABSENT OF UNDUE INFLUENCE
II. CAPACITY TO SIGN A CONTRACT
-
COMPREHENSION OF WHAT IS “GOING ON” IN THE TRANSACTION
-
REASONABLE TERMS IN THE AGREEMENT
-
UNDERSTAND THE NATURE AND QUALITY OF THE CONSEQUENCES OF THE AGREEMENT
-
ABSENCE OF UNDUE INFLUENCE
III. CAPACITY TO SIGN A POA. THE SIGNOR MUST:
-
KNOW AND TRUST THE AGENT
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UNDERSTAND THAT HE/SHE IS GIVING THE AGENT THE POWER TO ACT IN HIS/HER STEAD
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BE ABSENT OF UNDUE INFLUENCE
WHAT IS THE LAWYERS DUTY IN ALL THIS IS?:
1. TO CARRY OUT THE CLIENT’S WISHES
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TO MAKE A REASONABLE INQUIRY INTO THE CLIENT’S CAPACITY
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TO MAKE A REASONABLE DETERMINATION ABOUT THE CLIENT’S CAPACITY
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TO DETERMINE THE ABSENCE OF UNDUE INFLUENCE.
EVERYONE IS PRESUMED TO HAVE CAPACITY.
Do I Need to File a Guardianship When My Disabled Child Turns 18?
Parents of disabled children are often encouraged to consider a guardianship by a number of sources – school counselors, case managers, medical advisors, etc. The truth is that guardianships are not always needed.
I. What is a Guardianship? It is a court proceeding in which you ask the court to declare your child to be incompetent. A guardian takes over. Your child is stripped of the legal capacity to act for him or herself.
II. There are Different Kinds of Guardianships. Primarily two kinds:
1. Guardian of the Estate – Money management. If there is no money in the child’s name, no guardian of the estate is needed.
2. Guardian of the Person – Health care and daily living.
III. Advantages of Guardianship.
1. It puts one person in full charge of all decisions.
2. It gives you authority to enforce your decisions.
3. It protects ward’s money/property.
4. It protects the ward and the guardian.
IV. Disadvantages of a Guardianship.
1. Declaring your child incompetent can be demoralizing.
2. It costs $3,000 - $5,000 up front, and $1,500 to $2,500 every year – plus a bond in some cases. 3. You need court approval to spend money (Guardianships of the Estate, only). That costs extra. 4. You must take a lengthy class.
5. You must file reports.
V. Alternatives – Only Applies to the Cooperative and Highly Functional Disabled Child.
1. Power of Attorney.
2. Living Will.
3. Power of Attorney for Health Care.
4. Joint Financial Accounts.
5. STABLE Account.
6. Trusts.
VI. So, do I need to file a guardianship at age 18? Not necessarily – if your child is cooperative and high functioning, try one or more less intrusive options first. You can always “default” to a guardianship, if needed.
THE AFTERLIFE OF YOUR FREQUENT FLYER MILES
In a normal year, Americans rack up about 3 trillion frequent flyer miles. The average is about $622 per household per year. And travel experts are predicting that travel this year will exceed all previous years. What happens to those frequent flyer miles when we die?
Many airlines allow you to give your miles to your heirs – so do many hotel reward programs. There is often a fee - $50 - $100.
Neat idea – but also a pain in the neck – probably worthwhile but a pain nonetheless.
How does it work?
You can do it in a Will. You can be specific or it will pass as a part of your residual estate.
You can do it in a Trust.
You can do it in a beneficiary designation specific to those loyalty points.
To make the claim:
Have a death certificate.
Have the regular address and email address of the deceased.
Have the account number and password of the deceased.
Have your own account number and password.
Have the transfer documentation (assignment, Will or Trust)
Then contact the airline – probably by phone – and be patient.
Some airlines (Delta and American Airlines) will send you a packet to fill out. Some airlines (Southwest) simply do not allow transfers.
Loyalty points are part of your taxable estate – so they should go on your estate tax return – if you file one. The hardest part is how to pick a value for them. I have never seen loyalty points on an inventory or on an estate tax return. The IRS has not adopted an enforcement plan relative to FFM.
Don’t take the first “No” as an answer – try again.
Tips to make things easy:
Make a list of all your frequent flyer accounts and put it with your Will.
Sign a document that says “When I die, I leave my frequent flyer miles in Delta Airlines Acct. # to my wife, Jane Doe.
Transfer those miles to your own account, if the plan allows. It is best to do that before death. But, you can log on as the deceased and do it that way – if you know the account number and password (and other security info).
Some plans allow the owner to buy tickets for others. You can long on as the deceased and buy a ticket for yourself.
Medicare and Medicaid are the same thing, right? They come as a package, right? Aren’t they the same?
Well, while they both address medical costs, they are not a package and they are very different.
Back in the 1960s, when JFK was assassinated, he was succeeded by his VP – a Texan named Lynden Johnson. Johnson’s goal was to expand the social “safety net”. He called his program “The Great Society”.
The Great Society had three main pillars:
1) Expanded Social Security.
2) Medicare – this was a new Federal program.
3) Medicaid – this was a new State program funded with federal money.
Medicare is federally subsidized health insurance. It was designed for folks who were otherwise uninsured. It covers everyone over 65 and disabled people of any age. There are no financial conditions – just age and disability. For example, Warren Buffet and Bill Gates are eligible for Medicare.
Medicare covers doctor bills, hospital bills, and, if you elect, prescriptions. It is NOT comprehensive and many folks elect to buy additional coverage (called “gap filler” or Medi-gap policies, etc.) Medicare is pretty cheap – but the premiums are scaled such that higher income folks pay higher monthly premiums.
Premiums are very often deducted from your social security before you get your check.
Medicare is funded and run by the federal government. They often hire private insurance companies to manage the claims and the paperwork.
But, most of all, Medicare is health insurance and only pays for medical care – just like the health insurance you get from your employer.
Medicaid is not the same. It is not health insurance. It is not run by the federal government. Medicaid is a welfare program – run by the state welfare departments. The federal government pays a big chunk of the cost but does not run the program. And, it is for poor folks only – you have to be broke to qualify to receive it. There are no premiums to pay. But, it is not the sort of thing to aspire to have. It’s something you “settle” for if you do not have a better choice.
Initially, Medicaid was designed to pay for nursing home care. Not medical care – just room and board (which is NOT covered by Medicare). Called “custodial care”, it has expanded in many ways over the years and now offers benefits for disabled people living in the community. The purpose is to keep them out of a nursing home because that saves the government money and improves quality of life.
Examples of what Medicaid will pay for now:
Treatment of substance abuse
Private duty nursing
Nursing home room and board
Assisted Care
Vision
Dental
Transportation
Family planning
Prescriptions
Clearly, there is overlap between these programs. And there are folks who are eligible for both. This causes a lot of confusion and that is not going to change anytime soon. So, seek help when you need it. Do NOT rely on what you hear at the hairdresser or the barber shop. Call a Medicare specialist, a Medicaid professional or call Pro Seniors for help.
A study published by American Economic Review in 2021 found that
most seniors in the U.S. have a person or agent in mind to take over their
finances in the event of cognitive decline. 81% have a family member in mind
and 19% have an institution or a professional in mind.
Here are the major challenges they found:
1) Not aware of one’s own decline;
2) Not wanting to give up control;
3) Agent is not aware of decline; and
4) Agent is not “available”.
Let’s talk about possible solutions:
1) Pick the right Agent. Agent must be:
a. trustworthy;
b. reliable;
c. “available” – which means they have both the time and the
“right” temperament; and
d. young and relatively healthy.
2) The Agent does NOT need to be:
a. close by (although that helps);
b. a relative; or
c. a medical or financial expert.
3) Sign a financial POA and medical POA:
a. does not have to be the same person;
b. name a backup Agent;
c. “refresh” the financial POA every 3-5 years; and
d. avoid the “springing” POA.
4) When it is time to turn things over:
a. file POA in local county;
b. file a copy of the POA with every company you do business
with – starting with the bank, broker and other financial
institutions. The medical POA gets filed with each healthcare
provider, doctor, hospital, and health insurance company.
When does the Agent “step in”? Depends on the individual. My parents
had a division of labor that was typical of the WW II generation. Dad
managed the money, and mom managed the house and the family. When
dad got bad, my mother did not want to manage the finances. She was plenty
smart – she was the valedictorian of her high school and nursing school. But
she had NO interest in finances. So, she gave it up immediately.
Other cases are very different. The Agent must look for clues like
bounced checks, late tax returns, unopened mail, double payments, etc.,
then offer to help – gently. It will take more than one offer.
WHO SHOULD PURCHASE LONG-TERM CARE INSURANCE?
Buying long-term care insurance is one way to protect against the high cost
of long-term care. However, this type of insurance may not be for everyone,
so consider all your options.
Long-term care – care in a nursing home or at home – may be paid for in
four main ways:
- Out-of-pocket. If you have sufficient resources, you can pay for
your long-term care needs with money you have saved. - Medicare. Medicare covers short-term nursing home stays after
an illness or injury that require hospitalization. Medicare covers up
to 100 days of “skilled nursing care” per illness. But, rarely do you
get the full 100 days. Usually, it’s more like 20 days. - Medicaid. If you have limited resources, Medicaid will pay for
nursing home care. In order to be eligible for Medicaid benefits an
Ohio nursing home resident may have no more than $2,000 in
“countable” assets (it may be higher in some states). - Long-term care insurance. With long-term care insurance, you
pay monthly premiums to buy a policy that pays your long-term
care costs if you are admitted to a nursing home or need home
care (depending on the policy).
Determining whether you need long-term care insurance depends, in large
part, on your financial situation. The cost of a long-term care insurance
policy varies considerably, depending on your age when you purchase the
policy, the benefit period, and the level of benefits, among other things. But
the premiums are expensive. Therefore, if you have the resources to selfinsure your long-term care and still have money left over, you likely don’t
need to buy a long-term care policy. On the other hand, if you cannot afford
to pay monthly long-term care premiums, you will likely be able to qualify
for Medicaid.
Another factor to consider is your family’s health history. A common reason
for needing extended long-term care is dementia. If you know you have a
family history of Alzheimer’s disease, for example, it may make more sense
to buy insurance.
Of course, we never really know what the future may bring. Long-term care
insurance is like any insurance policy: we don’t know if we will ever need it.
In general, long-term care insurance is something to consider if:
- You have the resources to pay the premiums, even in retirement;
- You want to preserve your estate for your heirs; and
- You don’t have enough money to self-insure.
How much do you need to “self-insure”? That depends on your income and
your marital status. If you are a single retired teacher with a good pension
(more than $5,000/mo) then a million in investments is probably enough. If
you are a married “1099er” with no pension, it would take more like three
million. And, of course, if you have no children to leave your money to, that
changes everything.
LTC insurance is not for everyone. Folks with no resources cannot afford it
and folks with substantial resources can self-insure. The folks in between
need to look at this.
AARP has excellent material to help walk you through this decision without
bias. Go to their website for more information or call there.
SIX TIPS FOR SELECTING A GUARDIAN FOR MINORS
THIS IS ONE OF THE MOST IMPORTANT PARTS OF ESTATE PLANNING. SELECTING A GUARDIAN TO RAISE YOUR KIDS IS NOT HARD FOR SOME PEOPLE, BUT FOR OTHERS, I OFFER THE FOLLOWING CONSIDERATIONS:
1. PARENTING SKILLS: RECOGNIZE THAT YOUR CHILDREN WILL BE TRAUMATIZED BY YOUR DEATHS. THEIR GUARDIANS WILL NEED PATIENCE AND COMPASSION.
2. LOCATION: WHERE DOES GUARDIAN LIVE: WHAT CITY? WHAT SCHOOL DISTRICT?
3. RELIGION, POLITICS, MORAL BELIEFS
4. GUARDIAN’S AGE / WARD’S AGE
5. GUARDIAN’S LIVING ARRANGEMENTS. ARE THERE OTHER MINORS IN THE HOUSE? IS THE HOUSE BIG ENOUGH?
6. GUARDIAN’S FINANCIAL SITUATION LEAVE THEM SOME LIFE INSURANCE OR OTHER MONEY – BEST IF IN TRUST
AND IF YOUR KIDS ARE OLD/MATURE ENOUGH, YOU MAY WANT TO ASK FOR THEIR INPUT. FINALLY, DON’T FORGET TO HAVE A “BACK UP” GUARDIAN.
NOTE – YOU DON’T HAVE TO DO THIS IN A WILL → YOU CAN JUST SIGN A NOTARIZED APPOINTMENT OF GUARDIAN.
NOTE – SOME OF THESE PRINCIPLES APPLY TO GUARDIANS OF DISABLED ADULTS.
7 Rules of Thumb in Choosing your Agent in a Power of Attorney
A Power of Attorney is a legal document you sign to name someone to be your agent to act on your behalf. That means that you must decide who to name as your agent. You can pick anyone you want. Married clients usually name each other and, if they have children, one or more of them as alternates. Unmarried clients or married clients whose spouses have dementia usually name children, if they have them. But, what are the considerations?
Here are a few rules of thumb to help you make your decisions:
- Only consider people you can trust to act in your best interest honestly, deliberately and transparently.
- Only consider people who have the time and emotional capacity to do the job.
- Pick someone who is decisive and well organized. They don’t need to be an accountant, a lawyer or a financial planner – they can hire those skills.
- Proximity is important, but not conclusive. It will be easier for someone who lives in your community to travel to banks to be added to your accounts, to collect your mail and pay bills, to deal directly with vendors. That said, a lot can be set up while visiting you and handled electronically afterwards.
- Avoid using co-agents. You don’t want two “cooks in the kitchen.” However, you do want a “back-up” agent named in the Power of Attorney. If you are compelled to name co- agents, only name two people as the POA and give each authority to act independently of the other.
- Don’t worry too much about the feelings of anyone you don’t name. It’s more important that you have an agent or agents you can have confidence in.
- Consider the age and health of your agent. If you follow these rules of thumb, you should be able to choose the right person or people to name in your Power of Attorney. If the result is that you do not have any family member or close friend that you feel comfortable with, you can name a professional, such as an attorney, accountant or bank. This is not common and will cost more in fees than naming a family member. But if it means that you’ll be protected and you’ll avoid family fights, it may well be worth the cost.
End-of-life decisions are never easy. One of the toughest decisions you may have to make is whether you need nursing home care or hospice care. It helps to know the difference.
Nursing Home Care
Nursing homes residents receive treatment to extend their lives. This care includes custodial and skilled care. Custodial care means assistance with dressing, bathing, cooking, laundry, and other types of personal care. The provider does not need a medical license to provide this type of caie. Skilled nurslng care is provided by licensed medical practitioners. Skilled care is medical treatment that includes wound care, physical therapy, injections, and other care that ensures their physical well-being. Skilled care residents usually also receive custodial care. Medicaie generally does not cover custodial care. Medicare Part A covers certain medical conditions but is limited to short-tern care in a skilled nursing facility (rather than a nursing home).
What is Hospice Care?
Hospice care is an option for patients who do not wish to receive treatment or extend their life, but want comfort care as they reach the end of their lives. Hospice care teams include doctors, nurses, social workers, spiritual advisors, and volunteers. A hospice care team is also trained in treating end-of-life pain. Hospice care can be administered in a patlent's home or in an institutional setting. Hospice may also provide support to family members and caretakers, including respite care. In an institutional setting, Hospice patients generally receive custodial care as well.
A Note on Concurrent Care
Complicating matters is the fact that Medlcare will not cover custodial care at all and generally will not cover Skilled care and hospice care (known as concurrent care) at the same time. Currently, individuals on Medicare must give up Medicare payment for care related to their terminal condition if they want to receive Medicare's hospice benefit. As a result, many individuals facing a terminal illness may not opt for hospice support services. Policymakers have been pushing for a benefit within Medicare that would allow patients to receive hospice care services and curative treatment simultaneously. The Centers of Medicare and Medicaid Services has spent the past several years testing various models, including one known as the Medicare Care Choices Model (MCCM). MCCM has been shown to iirpiove the quality of patients' end- of-life while also resulting in Medicare savings. However, this option has not yet been made permanent.
End-of-Life Dilemma: Which Should I Choose?
While considering the next steps to take in your health care plan, speak candidly with your family and health care team about your needs and how you see your future. If you have questions about coverage options that may be available to you in a nursing home or with hospice care, speak to your elder law attorney.
Most older adults want to remain in their homes and communities as they age rather than move into assisted living facilities or nursing homes. To accomplish that, those folks must take steps to protect their physical, mental, and financial welfare.
What Does it Mean to Age in Place?
The Centers for Disease Control and Prevention defines aging in place as a senior's "ability to live in one's own home and community safely, independently, and comfortably, regardless of age, income, or ability level." According to AARP, more than three-quarters of older adults prefer to age in place. To do that, consider these issues:
Resources to Manage Chronic Diseases
Seniors with a chronic disease should focus on:
• Accessibility in the home;
• Proper nutrition; and
• Dental health. Research has found that proper oral care can help prevent the progression of many chronic diseases.
Eating Well While Aging at Home
Proper nutrition is a vital part of caring for yourself at home. If you need meals, Meals on Wheels is a great resource here in Cincinnati. We have several
non-profits that offer meals on wheels. I toured Meals on Wheels S.W. Ohio some years ago up in Price Hill. Top notch operation. They make the meals onsite and deliver them to your door. Neighborhood senior centers, places of worship, and charities may also provide a hot meal while you make new friends. If you cannot leave your home, Door Dash will deliver food at your door for little or no cost. But, restaurant food may not be so "balanced".
Support for Mobility
Aging in place is a much more realistic goal if you can walk for exercise, access transportation to medical appointments and errands, and maintain a safe environment at home, free from increased fall risks. Consider simple changes you can make to your home to promote your safety. Examples of helpful modifications around the house include handrails, temporary ramps, no-slip bath rugs, and assistive seating.
Mental Health, Substance Abuse, and Memory Care Services
There is an increased need among older adults for mental health, substance abuse, and memory care services. An estimated 20 percent of older adults have a mental health disorder, and the total number of seniors with a mental health or memory care diagnosis is likely to increase over time. Suggestions for addressing mental health concerns among older people include:
• Focusing on preventative care. Identify warnmg signs of depression, anxiety, and memory care problems.
• Look for common signs of a substance abuse. This is an often overlooked area of older adult mental health care. Some common signs to watch for include reduced hygiene, unexplained bruises, erratic behavior, and the smell of alcohol on their breath.
The Need for Social Connection Among Aging Adults
Older adults benefit tremendously from social connections and interaction. Consider:
• Joining an organization or social club
• Volunteering
• Learning a new hobby
• Attending a religious institution
• Adopting a pet
• Using technology to stay in touch with friends and family
Wearables and Smart Monitoring Devices
Technology can help monitor our health and that of our aging loved ones. Examples of wearable health and smart-home monitoring devices include:
• Smartwatches and smartphones.
• Medical alert bracelets and necklaces.
• Sensors and smart locks can alert caregivers when their loved one living at home leaves a window, garage, or door open, or has forgotten to lock them.
• Small plugs, which can automatically turn on and off lights, space heaters, thermostats, security cameras, and more.
Medicaid planning can be a difficult and confusing process. The following are some common mistakes people make when planning to apply for Medicaid.
1.Thinking it is too late to plan. It is almost never too late to take planning steps, even after a senior has moved to a nursing home. (e.g. Prepay funeral)
2.Giving away assets too early. First, it is your money (or your house, or both). Make sure you take care of yourself first. Do not put your security at risk by putting it in the hands of your children until you must. Precipitous transfers can cause difficult tax and Medicaid problems as well. You may need money to get into a quality place and step up in cost basis. This is especially true for married persons.
3.Ignoring important safe harbors created by Congress. Certain transfers are allowable without jeopardizing Medicaid eligibility. These include: transfers to disabled children, caretaker children, certain siblings, and transfers into a trust for a child who is disabled and under age 65; a transfer to a “payback” trust for yourself if under age 65; and a transfer to a pooled disability trust at any age.
4.Failing to take advantage of protections for the spouse of a nursing home resident. These protections include:
1.The purchase of an immediate annuity,
2.Petitioning for an increased community spouse resource allowance, and in some instances,
3.Petitioning for an increased income allowance, or
4.Refusing to cooperate with the nursing home spouse’s Medicaid application.
5.Applying for Medicaid too early. This can result in a longer ineligibility period in some instances. This is a problem when there have been gifts. It is also a waste of time – and frustrating (very) and a lot of work.
6.Applying for Medicaid too late. This can mean the loss of many months of eligibility. You can only go back three months and only in limited cases.
7.Not understanding how Medicaid affects your home. Nursing home residents do not automatically have to sell their homes in order to qualify for Medicaid, but that does not mean the house is completely protected. The state will likely put a lien on the house while the resident is living and attempt to recover the property after the resident or his/her spouse has passed away.
8.Not getting expert help. This is a complicated field that most people deal with only once in their lives. Tens of thousands of dollars are at stake. It is penny wise and pound foolish not to consult with an attorney who knows how to guide clients through the process. And, in many cases, the attorney’s fee is part of the “spend down”.
Several years ago, a Court of Appeals in Pennsylvania ordered a son to pay the $93,000 nursing home bill of his mother. Pennsylvania is one of several states that make children responsible for the care of their parents. Actually, these laws can be traced back to Colonial America.
28 states have such laws. Ohio, Kentucky and Indiana are 3 of them. Note that all 50 states have laws obligating adults to care for minor children.
These laws fall into 2 categories: Civil and Criminal.
1.In “civil” states, kids can be stuck with the care costs of a parent.
2.In “criminal” states, the kids aren’t stuck with the cost, but they can go to jail for failing to care. This is also called “elder neglect” and “elder abuse.” We will cover that topic in an upcoming program.
There has been news recently in the media about nursing homes suing the children of their residents for the cost of care. For example, there has been a lot of that activity in Western New York. In the last 4 years, over 150
such cases have been filed. I’ve also read about such cases in Washington, D.C.
While Ohio, Kentucky and Indiana have states against elder abuse, they do not have laws that create civil liability for nursing home bills. But, that does not resolve all concerns. You can still be liable for nursing home bills IF you sign ad admission agreement that says you are responsible. There are two ways that can happen:
1)The son/daughter signs the admission agreement in his/her own name as the “responsible party.” Don’t do that. If you are signing on behalf of your parent, sign as POA - - not personally. So sign their name, followed by your name and POA.
2)The admissions agreement says that adult children are liable - - and the adult children sign it. Again, the solution is the same - - DO NOT sign your name alone. Only sign as your parents’ POA.
There are not many of these cases on the books. I couldn’t find any cases in Kentucky. Clearly, it is not enforced. I found a few cases in Ohio.
There was a case back in 1986 where an Ohio nursing home sued a child for civil liability and the court threw the case out because the child had not signed a payment guaranty.
There was also a Warren County case in 2010 where a nursing home sued a wife and son on an unpaid bill and the nursing home won because the wife and son did not contest the claim.
There was also a case right here in Hamilton County where the child took the parent’s house and the nursing home sued. The nursing home won that case because the child took the assets and screwed up the Medicaid benefits so the nursing home was not getting paid.
Finally, there was a case in Cleveland in 2020 where a nursing home sued a resident’s daughter for $70,000 in care costs. The nursing home failed largely because the daughter had checked a box on the admission form that said she would not be responsible for the bills.
One final note: Ohio law presumes that if you care for your parent, it is done so for free. There are many cases where kids made a claim against a
parent’s estate for care. That’s a “no go.” Yes, you can be paid for caring for a parent, but only if the parent agrees in advance – and put it in writing.
I’m not an insurance agent which means I’m not selling anything. I think that gives me some objectivity to talk about life insurance.
There are lots of reasons to buy life insurance but the two biggest ones are:
1.To protect your dependents
2.As an investment vehicle
I’m not a big fan of using an insurance company to manage my money. That’s what financial planners and money managers are for. I will leave that topic for someone else to discuss another day. I want to talk about using insurance to protect your dependents.
Life events that call for life insurance:
1.Getting married. Marriage itself does not trigger a need for life insurance unless one spouse is financially dependent on the other and there are no assets to help him/her. Or, perhaps one spouse is disabled. Then, life insurance can be real important.
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2.Children. This is the classic case. If you die while your children are young, you need to leave something to your spouse or to a guardian to raise the children. This even applies to “stay-at-home” spouses. “Stay-at-home” spouses contribute a lot of economic value to a family. If he/she dies, there will need to be money to cover child care.
3.Borrowing money. If you borrow money to buy a house or start a business or educate your kids, you need to be sure that you do not leave that debt in your estate when you die. Life insurance (and disability insurance) works great here. When you die, you should at least leave enough money to your spouse to pay off all debt – at the very least, the joint debt.
4.Buy/Sell Agreements. If you are in a business with a partner, you need to think about what happens to that business or that partner if you die. Often in small businesses, the death of a key partner can leave the business in jeopardy – especially if there is significant debt. Or, you may want your partner to buy out your share at your death. Life insurance can provide the business cash to pay off debt or buy out your share.
5.Second marriage. When folks remarry, they have to confront the question of “who do I leave my money to?” If I have children from a previous marriage, I may wish to leave my money to my kids. I may even be required to do that in my divorce decree. But what about my new wife? And what if my new wife and I buy a new house with a new loan? I can use life insurance to
leave my new wife a lump sum without significantly reducing what I leave my kids.
All these scenarios are about protecting your dependents, your spouse, your kids, and your business partner. But, hopefully a time will come when you do not have any dependents or that you have other assets to support them. At that time, you no longer need life insurance.
This is why many people prefer term insurance over whole life. Term insurance has lower annual premiums and you can drop it when you no longer need it.
Whole life insurance is more of an investment vehicle. That’s fine, but it is a different approach altogether.
Want to make your adult children squirm?
Want to give them the hebegebes?
Then sit them down and tell them about your estate plan. If that doesn’t work tell them how you want your funeral to be done.
Joking, of course. But not really. Your kids won’t like this but they will thank you later - Big Time.
Topics to cover with your kids.
- List of assets
a. Value
b. Location
c. Any special info
d. Do not forget life insurance
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2.Contents/terms of:
a. Your Will
b. Your Power of Attorney
c. Your Living Will and Power of Attorney for Health Care
i. Talk about end of life
3. Location of key documents
a. Will
b. Power of Attorney
c. Living Will and Power of Attorney for Health Care
d. Tax returns
e. Check book
f. Financial records
g. Life insurance policies
h. Safety deposit box and key 4. Contact information for:
a. Doctors
b. Lawyer
c. CPA
d. Money manager
e. Business partner
5. Special instructions regarding:
a. Special people
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b. Special mementos
i. Jewelry
ii. Heirlooms
iii. Relevant family history
c. Pets
d. Obligations to a business partner
6. Funeral arrangements - consider preplanning or prepaying your funeral.
This will really help your family.
a. Give instructions for burial, cremation, etc.
b. Gravesite and stone
c. Name of funeral home.
So, you signed your Will and Power of Attorney. Maybe, you have signed a Trust, as well. Good Job! Now, you are all set, right?
Well, not so fast. There is one more step – and it is really important.
Your Will is actually NOT the only way to designate a beneficiary. There are other ways. The Will only affects assets titled in your own name alone. But, your assets are often not titled in your name alone.
Your Will does not affect any asset that you own jointly with others. It also does not affect your retirement accounts or your life insurance. Your Will does not affect annuities. Those assets have their own beneficiary designation. And, just to make things extra complicated, Ohio also allows you to put a separate beneficiary designation on your home, bank accounts, stocks, bonds and cars.
The final step in finishing your estate plan is to look at the title to all of your assets – ALL OF THEM – to be sure it fits all together.
For example, if you plan to leave everything to your spouse, then be sure that your spouse is listed as a co-owner or a beneficiary on all your assets. Check the beneficiary designation on your retirement accounts and life insurance. Check your deed and car title.
On the other hand, maybe this is a second marriage for you and maybe you want to leave your assets half to your second spouse and half to your kids. Better check your life insurance or retirement accounts and be sure they are set up to payout in the same way.
And, look at your deed. Let’s say that your Will leaves half of your assets to your kids, but the house is titled in your name and the name of your second spouse. When you die, your kids are not going to get one-half of the house – and that could be a very big percentage of your estate.
How do you fix that? Well first, you sit down with your spouse and talk it over to be sure that you are on the same page. Then, for second marriages, maybe you put the house into a trust that gives your spouse the right to live in the house after you are gone. Then, when your spouse dies later, the house gets sold and half goes to your kids and half to your spouse’s kids.
Or, another idea is to leave the house to your second spouse and give your kids something else of equal value – like life insurance. That means that you fill out a beneficiary form that names your kids as the beneficiary of the insurance policy. That policy will then go to your kids no matter what your Will says.
Then, tell your spouse and your kids what you did and why. Tell your attorney, as well.
The bottom line here is that after you sign your Will, check the title to your assets to be sure that it all fits together as you wish. Only then, are you really finished.
Some people do not claim their social security benefit until age 70.
WHY??!!
Back when social security started in the 1920’s, FRA was 65. At that time, the average worker lived one year after 65. That has changed – a lot. So, currently full retirement age is being phased up to 67. For example, if you were born between 1943 and 1954, your full retirement age is 66. If you were born in 1955, your retirement age is 66 and 2 months, and that goes up until it reaches 67.
What does that mean? Full retirement age is the age at which you get your “full” retirement benefit from social security. But, you can get less than that or more than that. You can apply for benefits at age 62 – but you will take a significant “haircut”.
Or, you can apply later than FRA and get “extra”. In fact, every year that you wait after FRA, you will get an extra 8% per year – over and above the inflation adjustments.
So, if your FRA is 66 and you wait until 70 to apply for benefits, your
monthly check will go up 32%, plus inflation. That’s why some people wait
– they get a big “kick”. But, after age 70 – no more increases. So do not wait any longer after age 70.
Understand, of course, that you will be receiving those larger checks for fewer years – four years fewer to be exact. So, it will take over ten years to “break even” on this strategy. This is a better bet if you have good health and longevity in your family – and you can afford to wait. So, this strategy is clearly a gamble and those who select it are betting that they will live well into their 80’s.
Note that this only applies to benefits based on your own work record. If you are claiming benefits on your spouse’s work record, don’ t w ai t – you will not get any increase by waiting.
Only about 6½% of folks wait until 70 – so this is an elite group. Congrats to you if you are one of these folks. I am, myself.
But one final note – if you have waited to 70 – apply now. This is not automatic. You must apply. You can apply up to four months before your start date and six months after. Any later than six months and you will lose some of your monthly payments.
To find out more, contact a SSA expert and have him/her run your numbers. There are many SSA experts here in town. Google it.
POWERS OF ATTORNEY
A European epidemiologist recently said that historically pandemics last about two and one-half years. If that applies to Covid, we may be winding down soon. The recent number of new cases would support that prediction.
So are there any “take aways” from all this? There are many. One of them is the importance of Powers of Attorney and Living Wills. With these documents, you can appoint someone you trust to act as your legal agent in case you are out of commission. You can also place limits on your medical treatment.
What is a POA? The word “attorney” roughly translates to “agent”. A Power of Attorney is a document that you sign to name an agent to act on your behalf. In Ohio and Kentucky, the two most common Powers of Attorney are 1) financial and 2) medical.
A financial Power of Attorney appoints an agent to manage your assets and legal affairs. This commonly includes paying bills, filing taxes, managing investments, selling property, and exercising your legal rights.
A medical Power of Attorney authorizes your doctor and hospital to talk to your agent. Without this, federal law prohibits your doctor from discussing your condition with anyone, including your spouse. The medical Power of
Attorney also authorizes the agent to make medical decisions and authorize treatment. It also authorizes the agent to decline treatment.
Medical Powers of Attorney are usually signed in conjunction with a Living Will. The term Living Will is a terrible term. It has little to do with “living” and it does not dispose of your property like a Last Will and Testament. Rather, a Living Will is a set of instructions – an advance directive – to tell the doctor what limits, if any, you place on your treatment if you become terminally ill. In a poll conducted many years ago in Ohio, the vast majority of Ohioans wanted to limit care if terminal. The remaining folks wanted all available treatment, no matter what. The Living Will is where you express your preference – whatever it is.
For example, my Living Will says that if I become terminally ill and nothing can save me and a second doctor confirms my condition, then no respirator, no feeding tube, and no paddles to the heart. Just keep me as comfortable as possible and let me go. Then, my medical Power of Attorney says that my wife has authority to make all other decisions – the non-terminal decisions. Living Wills are very specific and medical Powers of Attorney are very broad. They work as a pair.
Let me tell you a story. Back in March of 2020, a member of my family out east got Covid. This was very early in the pandemic. And she got very sick. She went from the doctor’s office to the emergency room and to the ICU in a matter of hours. She was “out of it”. She was nearly unconscious.
Fortunately, she had both a Living Will and a medical Power of Attorney that named her husband as her agent. Her Living Will said that if terminally ill, she did not want heroic measures taken – no feeding tube and no respirator.
Well, the doctors needed a decision right then and there. Do they put her on a ventilator and a feeding tube or let her go?
Well, as tough as it may seem, the choice was actually pretty clear. Like Ohio and Kentucky, her state law defines a terminal condition as one that is incurable, irreversible and untreatable. Covid is none of those things. It is curable, reversible and treatable. So, her Living Will did not apply.
But, her medical Power of Attorney did apply. Her husband authorized the hospital to put her on a ventilator. It was nip and tuck for ten days. She was very sick. But, she made it through. And, after a short stint in rehab hospital, she was home by late April and is doing well today.
The system works pretty well. But, we each have to do our part by putting the paperwork in place now. It’s easy. It’s cheap. It’s painless.
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Prearranged funerals are an excellent way to leave clear instructions
about what you want. This is remarkably helpful to your loved ones
who will be struggling with their loss. It also minimizes disagreement
among the family about funeral plans. -
Prepaying the funeral guarantees that the funeral will be paid for and
avoids any confusion or delay over who pays for it. -
Many prepaid funeral contracts freeze the price – so you are
protected against inflation. -
It can help qualify someone for Medicaid. To get Medicaid nursing
home benefits, you must reduce your available resources below
$2,000. This process is called “spending down.” Prepaying your
funeral is an excellent way to do that, but to qualify, the funeral
contract must be irrevocable. This is part of a larger strategy called
Exemption Planning. Exemption planning involves paying off debts
and prepaying important expenses.
There are many ways to prepay a funeral:
A. Assign an existing life insurance policy.
B. Buy a life insurance policy for just this purpose – this is very
common and very reliable.
C. Escrow funds to a bank or with the Department of Insurance.
D. Write a check to the funeral home. This one is rather risky –
not recommended.
Finally, you should know that funeral costs have gone way up in the last ten
years. As a result, discount funeral products and services are now
available. If that appeals to you, then check it out before you prepay.
Most seniors prefer to stay at home as long as possible rather than move into a nursing home. For many families, this means eventually hiring a caregiver to look after an aging relative. There are two main ways to hire someone: directly or through a home health agency.
Hiring directly:
When you hire a caregiver directly, you need to consider all the tax and liability issues. As an employer, you are responsible for filing payroll taxes, tax forms, and verifying that the employee can legally work in the United States. If you pay $2,300 or more in wages in 2021 to any one employee, you need to withhold and pay Social Security and Medicare taxes. If you pay more than $1,500 in wages in 2021, you need to pay unemployment taxes. In addition, a private caregiver may not carry his or her own liability insurance or workers’ compensation. If an accident occurs on the job, you could be responsible.
The benefit of hiring a caregiver directly is that you have more control over whom you hire and can choose someone whom you feel is right for your family. Another benefit is that hiring privately is usually cheaper than hiring through a home health agency. But, being the employer has its problems. When your caregiver calls in sick or quits without notice, you are the one
stuck with the problem. That’s a real issue if you work full time or live out of town.
The agency route:
When you hire through a home health agency, the agency is the employer, so you do not need to worry about tax and liability issues. The agency takes care of screening the employees, doing background checks, and providing insurance. In addition, a licensed home care agency must provide training and ongoing supervision to its employees. It can help the employees deal with difficult family situations or changing needs. The agency may also be able to provide back-up if a regular caregiver is not available.
The downside of going through an agency is not having as much input into the selection of the caregiver. Also, caregivers may change or alternate, causing a disruption in care and confusion. And agencies are often more expensive because you are paying them to do all the compliance work and supervision. Finally, I think it is worth the cost.
The pandemic has taught us many, many lessons, one of them the importance of having a power of attorney and a living will. Mark Reckman will explain what those are and what really get into depth here about what you need to be thinking through.
End-of-life planning is always stressful and upsetting, but a necessary conversation people should have with their loved ones. In this recent episode of “Simply Money”, I discuss how families should go about making preparations for the end of one’s life, even if it may seem like the end is nowhere close.
I share a story that’s both sweet and sour regarding a family I worked with in Cincinnati, and a nurse who made the last moments of a man’s life as wonderful as possible.
Frequent flyer programs are great ways for people to earn free flights and upgrades and cross destinations off their bucket lists. Each year, Americans accumulate 3 trillion frequent flyer miles — the equivalent of $600 per household! But have you ever considered what would happen to your frequent flyer miles if you die before using them? On a recent episode of 55KRC’s radio show Simply Money, I shared how you can preserve your miles.
Inheritance comes in all shapes, sizes, and surprises. And regardless of how it comes, you need to make sure you’re making the right decisions. On a recent episode of 55KRC’s radio show Simply Money, I shared with Amy Wagner the most important things you should consider after receiving an inheritance.
Our conversation dives into several inheritance complexities, including stocks, real estate, and taxes. To hear my full segment and what I recommend for people in these situations, click the play button below.
For 40+ years, I’ve served on the Wood+Lamping team helping clients in areas including Medicaid, estate planning, probate, real estate, and small business. I’m also a founding member of TriState Care Partners, a referral network of Cincinnati health care providers dedicated to helping seniors age in the place they call home.
Aside from work, I enjoy travel, tennis, scuba diving, and appearing biweekly on the 55KRC radio show Simply Money. The show, led by Nathan Bachrach and Amy Wagner, focuses on making money simple as they share entertaining explanations of how the economy, stock market, and potential scams can impact your investments and financial opportunities. My first appearance was over two decades ago, and I continue contributing to the platform to help educate others. Occasionally, I will talk about other legal issues related to money and elder care.
On a recent episode, I shared valuable tips on reducing caregiver stress during the COVID-19 pandemic. To hear my segment, click the play button below.