“THE PLAYERS” OF ESTATE PLANNING
The beginning of May always brings national attention to the Jacksonville area when the Players Championship comes to town. For one week each year, the Players is the hot ticket in town and for good reason; the tournament, which is part of the PGA tour, brings international golf superstars to town and raises millions of dollars for local charities. As Jacksonville estate planning attorneys, we find two different meanings in the words “the players”: we are reminded of all the positive energy that flows through the city at the time of the tournament, but also think about the players of estate planning.
Your estate planning “players” are the people you choose to protect your assets during your lifetime and distribute or manage them after your death. This would include the trustee(s) of your trust, the executor(s) of your will, and anyone to whom you have given a durable power of attorney. Other important players are those individuals to whom you have granted access your health care information or the power to make health care decisions for you, such as your designated health care surrogate.
The players you choose for your estate plan should be people that you trust completely and who know you well enough to make the decisions you would have made. They must also be willing and able to perform their duties. If it has been more than a couple years since you designated your estate planning players, you should review them to ensure that your choices are still appropriate and relevant today.
GEORGE WASHINGTON: ESTATE PLANNER
I have just returned from Indianapolis where I attended the 49th Collegium of the National Network of Estate Planning Attorneys. I wanted to share the highlights of my trip, including continuing my technical education, benefitting from the experience of preeminent colleagues, and a reminder of estate planning done right by one of the founding fathers.
I first took an intensive two day course concerning irrevocable life insurance trusts. An “ILIT” is a technique that can be used to allow life insurance proceeds to escape the estate tax. Although this has not been that much of a concern in recent years with the individual estate tax exemption ranging from $3.5 million to $5 million, if that exemption is lowered to $1 million on January 1, 2013, as is currently the law, then we expect many more people will inquire about setting up ILITs. Besides the technical component of the education, we also learned from life insurance professionals about concerns that life insurance policies previously placed inside ILITs run the risk of “blowing up” (becoming far more expensive then anticipated) and sabotaging the purpose for which the ILIT was constructed. This highlights the importance of monitoring the performance of your ILIT on a regular basis.
Besides having the time to focus on legal technical subjects, what I most enjoy about these gatherings is learning best practices from leaders in the estate planning field. We heard from Susan Bradley, author of the book “Sudden Money,” and from John A. Warnick, chairman of the Purposeful Planning Institute, concerning ways to go above and beyond the norm to assist our estate planning clients to “leave their wisdom along with their wealth.”
Passing on wisdom along with property is one of our core planning philosophies, and I was reminded that it goes back to the time of the founding fathers. In George Washington’s Last Will and Testament, he left his collection of swords to his nephews and, in addition to personal observations directed to each nephew, he said the following:
“These swords are accompanied with an injunction not to unsheathe them for the purpose of shedding blood, except it be for self-defense or in the defense of their country and its rights, and in the latter case, to keep them unsheathed, and prefer falling with them in their hands to the relinquishment thereof.”
Estate planning really can provide the setting for bringing out the very best in people. We would be happy to help you hand down your life experiences as well as your assets.
MOVIES ABOUT ESTATE PLANNING: THE DESCENDANTS
The movie “The Descendants”, which was nominated for five Academy Awards and won the award for best writing-adapted screenplay, is one of the best movies to tackle estate planning issues in quite some time. The movie contains a thorough discussion of advance healthcare directives, living wills, and their real life application. The movie’s lead character, Matt King, played by George Clooney, is the trustee of a trust which will soon come to an end because of an arcane rule of law known as “The Rule Against Perpetuities.” The movie generally is about the fracturing and healing which takes place within families. What is interesting to us is that the plot is wrapped around actual estate planning issues. [Spoiler alert, if you haven’t seen the film, you may to want to read the rest of the newsletter later.]
The movie begins with a boating accident, after which Matt King’s wife lies in an irreversible coma in a Honolulu hospital. She is being kept alive by artificial means. It turns out that she previously had executed advance healthcare directives which mandated that her spouse and physicians remove her from artificial means of life support, if there was no chance of her recovery. The existence of the healthcare advance directives relieved Matt of one of the many difficult decisions he faced in the film. How the rest of the family is informed and says goodbye to his wife is one of the subplots throughout the movie.
Matt also is the trustee of a century old trust which owns 25,000 acres of pristine land on the island of Kauai. Matt’s cousins, the beneficiaries of the trust, want him to sell the land to developers in order to reap a financial bonanza for themselves. He is torn between deciding to accept one of the offers and finding a way to maintain the land for use by his family and for the people of Kauai. This conflict is a frequent dilemma for trustees. At one point, his cousins even threaten to sue him if he doesn’t sell.
A decision concerning the land is made imminent because of “The Rule Against Perpetuities”. This complicated legal concept essentially means that no trust is permitted to exist indefinitely. Every trust must have a specific ending date. Florida has adopted the Uniform Statutory Rule Against Perpetuities in Section 689.225 of the Florida Statutes. In Florida, a carefully drafted trust may be able to exist up to 360 years under certain circumstances. Under other circumstances, it may be required to terminate no later than 21 years after the death of an individual then alive. The real life application of the rule is evident in the movie because the land trust is set to expire within 7 years, compressing the time for decision-making.
Final Verdict: The Descendants deals with the estate planning issues accurately, while entertaining and enlightening the viewer.
APRIL IS DONATE LIFE MONTH
The statistics speak volumes:
• More than 100,000 men, women and children currently require life-saving transplants
• Every 10 minutes, another name is added to the National Organ Transplant Waiting List
• On average, 18 people die each day due to the lack of organs available for transplant
National Donate Life Month was instituted by Donate Life America and its members in 2003 to help address this tragic situation. As estate planning attorneys, we are well aware of the stress families endure hoping for a loved one’s potentially life-saving organ transplant—and the anguish they suffer when one is not available in time.
We therefore welcome this initiative and suggest, if you haven’t made known your wish to be an organ donor, or if you’ve only put it on your driver’s license, that it’s a good idea to fill out an organ donor card or register as an organ donor at www.donatelifeflorida.org. If you take this additional step, you can specify which organs you would or would not like to donate and it will be easier for health care professionals to determine your organ donor status.
We also applaud the efforts of participants in National Healthcare Decisions Day (NHDD), which falls on April 16. The focus of NHDD is the importance of planning for future care through advance directives such as health care powers of attorney and living wills. Together, these initiatives go a long way toward creating greater public awareness about the need for, and benefits of, proper planning and communication about one’s health care wishes.
While organ donation and health care advance directives are deeply personal decisions, we hope you will consider the importance of making your wishes known in advance, discussing them with loved ones, and making sure they are both legally documented and easily accessible during an emergency, or in the event of incapacity. If you would like to make changes to your advance directives, or any other updates to your estate plan in general, we are here to assist you.
Will Your Facebook Profile Be Part of Your Estate?
If you are savvy enough to be online reading this blog, you most likely have a Facebook profile. Also, you are probably wondering what on earth Facebook has to do with probate. In most states, the answer to that question is still “nothing,” but that is no longer the case in Oklahoma.
In 2010, Oklahoma legislators passed a law that gives executors (called Personal Representatives in Florida) control over accounts on social media sites like Facebook and Twitter that were registered to the decedent. The idea is that the executor will be able to access, clean up or even shut down each account, according to his or her own judgment or instructions left behind by the account owner, if any.
It is easy to see the logic behind Oklahoma’s social media law; for many people, Facebook has become a virtual scrapbook full of photos, notes from friends, and family trees. It makes sense that the loved ones left behind would want to access and preserve these memories. It is equally clear that the creator of such a detailed profile might have an opinion as to who should access their personal information after their death.
The idea of social media profiles as estate assets is beginning to catch on in other states as well; Nebraska is already developing a law similar to Oklahoma’s and Oregon may be close behind. In states without such laws, your digital accounts and passwords should definitely be included in your overall estate planning.
If you have concerns about securing your virtual assets or any other aspect of estate planning, please feel free to contact us.
BEWARE OF SCAMS TARGETING THE ELDERLY
As estate planning and elder law attorneys, one of our primary goals is to educate our clients and community about how they can protect themselves and their assets. This newsletter will share and expand upon a recent article about con artists who target senior citizens. The Associated Press reports that “elder financial abuse” has become an “industry” that brings in billions of dollars each year. This form of elder abuse includes fraud perpetrated by relatives and acquaintances as well as scams run by complete strangers. The outsider-run cons can be particularly devastating, both financially and emotionally, because they are so effectively targeted at older individuals and very difficult to trace back to their often international origins.
One common scam involves a con artist calling a targeted person and claiming to be his or her grandchild. The impostor then says that (s)he is facing some sort of crisis, often abroad, and needs the potential victim to wire money immediately, and without telling anyone else in the family. Another way that scammers prey on senior citizens is with correspondence claiming that the potential victim has won a lottery, usually in another country, but must send money to cover fees and taxes in order to receive the prize money.
We have met real victims of the two scams described above. One woman actually had a grandchild living outside the United States and so wired a few thousand dollars to a foreign country. Another victim received calls and letters that she had won the lottery in a country she had never visited, as well as correspondence from a psychic stating that she would soon be wealthy, and was conned into sending several thousand dollars to claim the fake prize.
Please be aware that these scams are out there and that con artists are getting better at targeting their victims all the time. If you would like more information on protecting yourself or your loved ones from becoming a victim, we are here to help. For the full Associated Press article, click here:
http://www.msnbc.msn.com/id/46574273/ns/business-personal_finance/
HOW DOCTORS PLAN FOR DEATH
A recent article in The Wall Street Journal discussed how and why doctors die differently than most of their patients. Although the article is generally interesting, there was one statistic that caught our attention: a survey of doctors showed that 64% of them had planned for potential incapacity by executing an advanced directive. This figure is remarkable because, in general, only 20% of Americans have advanced directives.
Advanced directives are documents that provide instructions for how you would like medical decisions to be made if you are unable to make them yourself. These documents are a way to plan for future incapacity, whether it be a temporary coma or terminal condition.
Doctors encounter end-of-life conditions and terminal illness more often than the average person. They also have significantly more knowledge about the side effects and effectiveness of available treatments. According to the article, that is why doctors often decline medical procedures in favor of quality of life. We think that it also explains why so many of them plan for incapacity better than the rest of us.
Please feel free to contact us for more information about advanced directives and planning for incapacity.
If you are interested in reading the full article, you can find it here: http://online.wsj.com/article/SB10001424052970203918304577243321242833962.html?KEYWORDS=why+doctors+die
PLANNING OPPORTUNITY ENDS IN 2012!
No, we are not referring to the Mayan calendar-end of the world hysteria! Instead, we are referring to the end of the “Tax Relief Unemployment Insurance Reauthorization Job Creation Act”, which dies on December 31, 2012. That law provides unprecedented gift tax, estate tax, and generation-skipping transfer tax exemption amounts of $5,000,000 per person. (Indexed for inflation so that it is $5,120,000 this year.) If Congress fails to act to extend this law, then these $5,000,000 exemption amounts will all be reduced to $1,000,000 by automatic operation of law on January 1, 2013. Will Congress act? Who knows?
We do now know President Obama’s proposed law to modify estate and gift tax provisions. He is proposing that the gift tax exemption be returned to a maximum amount of $1,000,000 and that the estate and GSTT be reduced to $3,500,000 and that the top tax rate on those estates be increased from 35% to 45%. Considering all available information, as careful planners, we believe that this unique window of opportunity for gifting likely will close on December 31, 2012.
One of the reasons this gifting opportunity is so important is that by gifting assets now, you not only remove their present value from your estate, but you also remove all future appreciation of those assets. By removing appreciating assets from your estate now, the impact of that gift can be doubled, tripled or more over time. This is why we are encouraging anyone who may potentially benefit from this unique planning opportunity to run, don’t walk, to an estate planning attorney of your choice. If that choice should be Cramer Law Center, we are ready and standing by to help explain your options.
Medicare/Medicaid Planning: Why to consult an attorney before your parent is placed in a nursing home
We recently have been helping a family try to untangle a mess created by the lack of planning. The matriarch of the family (“Mom”) became ill and was hospitalized. Her condition was very serious, so the decision was made to place her in hospice care after the hospitalization. However, she recovered and then was transferred to a nursing home. During this trying process, her children were besieged with requests, such as “you must complete this Medicaid application immediately”, “sign this”, “sign here”…Finally, it all became overwhelming and they sought my advice.
As we often say, what you don’t know can hurt you. When Mom was placed in the nursing home, the family learned that Medicare would not pay any of the bill. This is because Medicare pays nursing home bills only under very limited circumstances. In order for payments to be made to a nursing home, Medicare rules require that the patient be admitted directly from a hospital stay of three (3) days or more and be undergoing some type of rehabilitation designed to improve the patient’s condition. If this criteria is met, then Medicare pays one hundred percent (100%) of the first twenty (20) days stay in the nursing home, and eighty percent (80%) of the next eighty (80) days’ stay. This can provide a family with some cushion of time within which to make plans to apply for Medicaid assistance, if necessary.
In our situation, because the family was unaware of this rule, they agreed to place Mom in hospice care first rather than the nursing home. Had they been aware of the rule, they would have been able to request that Mom be placed directly into the nursing home and that hospice perform its services there. Not knowing this fact, and without having consulted an attorney previously for advice, the family was required to pay several thousand dollars in expenses that it otherwise could have avoided.
The next mistake our clients made was succumbing to the pressures from the nursing home to “hurry up and complete your Medicaid application”. The family applied for Medicaid when Mom was ineligible to receive this assistance. Although Medicare is an entitlement to persons over the age of sixty-five (65) who are enrolled, Medicaid is need-based assistance, which is available only to impoverished citizens who meet Medicaid eligibility criteria. This criteria includes having no more than $2,000 in non-exempt assets and a limited amount of monthly income. In our family’s situation, Mom’s assets were limited, but slightly over the eligibility limits when the application was completed. By applying to Medicaid too soon, the family was forced to pay $6,700.00 out of pocket for the first month’s nursing home stay while taking the necessary steps to comply with Medicaid regulations and revising their application to reflect those steps.
Had Mom or her family planned for this eventuality ahead of time, the attorneys’ fees spent on such planning would have been far less than the out of pocket costs actually incurred. Plus, the family would have had peace of mind knowing how to orchestrate an orderly transition into the nursing home and would have avoided the stress and upset of being rushed into making decisions which were not in their best interests.
Our goal as elder law attorneys is to help as many people as possible avoid the Mom situation. If you or anyone you know may be dealing with Medicare or Medicaid in the near future, we would be happy to assist you with your planning needs.
LEAVING A LEGACY OF LOVE
Love is in the air with Valentine’s Day just around the corner – wouldn’t you like to start working on one of the greatest gifts you could give to the ones you love?
Although the words “estate planning” bring to mind death, money, and taxes for many people, we at Cramer Law Center believe that estate planning can and should be about love.
As part of our estate planning process, we offer our clients the opportunity to have a Priceless Conversation* with us at the beginning of our relationship and each year thereafter. In a Priceless Conversation, you will sit down with us and answer questions which are designed to capture as much of your personal and family story as you are willing to communicate. We record each conversation and give it to you in CD form so that you may share it with your loved ones at whatever time you deem best.
The Priceless Conversation topics are focused on helping you to leave a legacy that is more precious than money or possessions: your personal wisdom and life story. Topics include:
- The story of:
o Your life
o Your love with your significant other
o Your child(ren) or grandchild(ren)
o Your home
o Your treasured keepsakes
o Your pets
- Your views on and stories about:
o Money
o Success
o Business
o Faith
o Values
o Giving
Please feel free to post comments on our Facebook or Twitter or make an appointment if you have individual questions or concerns.
Cramer Law Center offers full estate planning services including wills, trusts, durable powers of attorney, health care surrogate designations, living wills, designations of preneed guardian, and more.
*™ Designed by Scott Farnsworth, Sunbridge, Inc.
