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Elder Law and Estate Planning Blog - Lancaster, PA
Monday, July 15, 2013
Do-it-yourself wills are becoming increasingly popular as a cheap way to create an estate plan. The number of online and DIY legal providers is continuing to grow, and their seductive ads draw people in. Additionally, people think their estates aren’t complicated so filling out a simple form will take care of everything.
Unfortunately, these DIY wills don’t take into account the complexities of life. Issues like step families and divorces, as well as planning for contingencies (that is, what would happen if one of your beneficiaries dies before you) need to be carefully considered. DIY wills never go that far, often leading to nightmare scenarios for the executors and attorneys handling the estate years later.
Most professionals know that DIY estate plans are dangerous, and that a single mistake can cause complications that only come to light after the person has died. The person is no longer there to explain his or her wishes, so all the heirs have to go by is the will. A will written incorrectly, even so much as using a word in the wrong place, can leave heirs disappointed and confused, and they could end up paying much more to lawyers as they try to sort things out, more than having a will written initially would have costed.
If you do decide to use a DIY will, you should have it reviewed by a local attorney. Since the laws are different in every state, you don’t know what may work on your DIY will in one state but cause huge problems where you live. Almost every time a lawyer does a review of a DIY will, he or she finds an error somewhere on the form.
And if you are worried about the costs of estate planning, let your attorney know in the first place. We are always willing to work with a client to keep the costs as low as possible.
Friday, July 12, 2013
On January 1, 2013, the annual exclusion from the gift tax rose to $14,000. This means that a person may give up to $14,000 to as many recipients as he or she wishes, meaning if you have 2 children and 8 grandchildren, you can make ten tax-free gifts of $14,000. If you’re married, both you and your spouse can make a gift of $14,000. The reason for most people making these gifts is to reduce the size of their estate.
But what if you want to give this gift money to a child. A single gift of $14,000 is a lot to give a child, not to mention $28,000. It’s too much to be used as spending money, and you don’t want this money to be left in the hands of your 16 year old grandson. And this money would belong to your grandson; his parents have no control over it. The law treats the minor as a separate person, and control of his or her property is governed by laws to protect the minor. One way to handle this money is to create a Trust and appoint a Trustee, but there is another way.
Pennsylvania’s Uniform Transfers to Minors Act (UTMA) allows individuals to give property to a minor while restricting the minor’s access to that property until a certain age (usually 21, but there are exceptions which require distribution at 18 or 25). With an UTMA account, the donor appoints a custodian to manage and invest the property until the minor reaches majority age. The minor’s access to the account is restricted, but the custodian may use the property for the minor’s benefit, similar to the duties and authority of a trustee. Unlike a trustee, the custodian does not need to provide regular accountings to the court of all activity, but he or she still must maintain accurate records of account activity.
Any adult can be a custodian, but the donor should not name himself or herself as custodian. Additionally, any earned income on the custodial property is reportable on the minor’s income tax return. While the tax is owed by the child, the rate of tax is determined by the parents’ tax bracket if the child received more than $1,900 or unearned income (this is known as the “kiddie tax”).
So how do you open an UTMA account? All you have to do is transfer any type of property to an individual “as custodian for (the minor) under the Pennsylvania Uniform Transfers to Minors Act.” Once the account is created using this language, the property belongs to the minor and cannot be revoked. And remember to use the child’s social security number on the account.
Wednesday, July 10, 2013
We understand that taking the steps to go see an estate planning attorney can be a difficult one. I mean, who wants to think about the possibility of dying? No one. However, taking this first step can protect your family and make it easier on them. Once you have made this step, we want to make things as easy as possible. Before you come, you should gather the following information, and you will be completely prepared for your appointment.
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Family Information. You will want the names, birth dates, and current addresses for all immediate family members or anyone that may be included in your will or power of attorney. If any of your children have special needs, you should also bring information relating to their lifetime financial needs.
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Property Information. Do you own a piece of land? A second house? Any information you can provide about real estate property, including their values and address, should be brought with you. Also, if you have an personal objects, such as vehicles, jewelery, coins, antiques, etc., you should make a list of them. Include a description, a physical location and any other important information in your list.
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Business Information. Like properties, if you own a business bring in information about this and think about who it should be passed to.
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Financial Information. Compile a list of all financial accounts (checking, savings, investments, stocks and bonds, like insurance policies, pensions, IRAs, etc.). Make sure you have account names, numbers, current balances, and designated beneficiaries. Oftentimes your lawyer will need proof of this information, so consider bringing your most recent financial statements to your appointment.
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Old Documents. If you already have a will, power of attorney, or trust, bring these old documents in with you.
While gathering this information, you might want to start thinking about thsee questions. You don’t need to have answers ready for your appointment, but some of these questions can be complex and you may want to think through the issues before your appointment.
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Who will be beneficiaries to your property?
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Do you want bequeath to a specific item(s) to a specific individual(s)?
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Is there anyone you do not want to be a beneficiary to your property?
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Do you plan on making bequests to any nonprofit organizations?
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Who do you want to act as executor of your will? What about as trustee of a trust, if you establish any? Or as guardians for any minors?
During your initial consultation, your estate planning attorney will review all of these things, as well as discuss your wishes, answer your questions, and suggest strategies to protect you and your family.
Monday, July 8, 2013
While there are promising new treatments to add to the life of a patient suffering from rheumatoid arthritis (RA), there are also a few simple lifestyle changes that will improve health and increase their chances of a longer life. If you suffer from rheumatoid arthritis, try out these life tips. If you don’t suffer from arthritis, you still might want to follow some of these tips for a healthier lifestyle.
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Sleep well. Not getting enough sleep causes the hormones leptin (hunger) and ghrelin (fullness) be off-balanced. This means you will eat more and gain weight, which can cause the pain and inflammation from your RA to become worse. Sleep also boosts the immune system, which will defend your body from the illnesses you don’t want to deal with while handling your arthritis diagnosis.
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Lift weights. Research from Great Britain shows that strength training as many long-term benefits for people with RA. Fit strength training into your schedule for a half hour two or three times a week for a better prognosis. It is recommended to start with a qualified trainer so as to not hurt yourself.
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Eat more fish. Improving your diet as a part of your treatment can help tremendously. For example, eating fatty fish (salmon, mackerel, halibut) twice a week will provide you with a good source of protein, relatively low saturated fats, and lots of omega-3 fatty acids. These omega-3 acids have been shown to reduce the risk heart disease and cancer, and a number of studies have found that fish oil reduces rheumatoid arthritis symptoms.
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Quit smoking. Smoking not only increases your risk of heart disease and lung cancer, but a recent Swedish study found that RA patients who smoke are less likely to respond to their treatment.
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Get regular check-ups. You may have been diagnosed with rheumatoid arthritis, but don’t forget about the things you usually do to stay healthy. Take the time to get a flu shot and other necessary immunizations to add years to your life and to improve your RA prognosis. Continue following the recommended schedule for cancer scans, and check your cholesterol and blood sugar levels.
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Be kind to your mouth. Taking care of your teeth and gums will improve your longevity, as researchers have found links between oral bacteria and a number of deadly health issues like stroke and diabetes. Brush and floss regularly to keep bacteria and dental plaque from building up, and make sure to get regular dental check-ups and cleanings.
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Maintain a healthy weight. Being overweight can put additional stress on your joints, something you don’t want while undergoing RA treatment. It can also put you at risk for a heart attack or stroke.
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Stay out of the sun. Several medications for RA treatment may make you more sensitive to the sun, so when you’re outside take care to keep the sun’s rays from reaching your skin and causing skin cancer. For better health in general, where sunglasses, a hat, and sunscreen if you’ll be outside for more than 15 minutes.
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Laugh! Laughter is the best medicine for people with rheumatoid arthritis because it can help you relax muscles and reduce the stress of your RA diagnosis. It can also relieve pain and strengthen your immune system, so go sit down with your favorite joke book!
Friday, July 5, 2013
Many people think that if they are single, they don't need a will or other estate planning documents. However, this idea is wrong! Estate planning is just as important for single people as it is for couples and families.
Estate planning ensures that your property will go to the people you want to inherit it, in the way you want and when you want. Without a will to let the state and your loved ones know your preferences, the state will decide who gets your property. Most states leave your estate to your children or other living relatives if you have no children, but there is no guarantee. If you have no living relatives, all of your property is given to the state, and not to the friends or charities you feel should get something. Without a will, you have no way of directing where your property goes.
Additionally, without a power of attorney, the state can decide who will make your healthcare and financial decisions if you become incapacitated. The person you name as power of attorney, your agent, will be able to step in and act in your place in financial decisions and healthcare decisions should you become incapacitated. By creating a power of attorney, you can name separate people as agents and decide their powers. Unlike married individuals, unmarried partners and friends usually cannot make healthcare decisions without signed authorization. Should you become incapacitated without one, no one can represent you unless the court appoints someone. This process is timely and costly, and it does not give you the option of choosing.
Whether you are married or single, estate planning documents are key to ensuring your wishes are met when you cannot make them known. To find out what estate planning documents you need, contact us today at (717) 560-4966 or questions@piersonelderlaw.com
Wednesday, July 3, 2013
Financial experts almost always advise us to wait until full retirement age or longer before collecting Social Security benefits, age 66 for those born between 1943 and 1954. And these advisors have good reasons for this recommendation.
Social Security provides a guaranteed monthly income for the rest of your life, which you are eligible to start receiving as early as age 62. However, if you start at 62, you suffer a penalty. Likewise, waiting until 70 years of age gives you a bonus on this monthly income. In both cases, the penalty and bonus are about 7% a year. Doing the math, if your benefit at age 66 is the average of $1,268, then starting benefits at 62 will give you only about $913 per month. Postponing the benefits til age 70 will cause it to expand by nearly a third, to about $1,660, for the rest of your life.
So if you get so much more by waiting, why would you grab Social Security when it’s first offered? Well, there are four good reasons:
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You need the money. Getting a 7% increase per year on Social Security benefits only helps if you can afford to wait, but if you need the Social Security to pay rent and buy groceries, then you should start drawing benefits as soon as you can. Besides, most people start drawing benefits before full retirement age. And you’ve earned the money, if you need it, it is available.
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You’re in poor health. If you don’t expect to live into your 80s or 90s, then it makes sense to start your benefits at a younger age. Although you’ll be getting less, in the long run you might be earning more. You are betting against your own longevity, but if you know your medical history (for example, if you have high blood pressure, diabetes, and have suffered a heart attack), you can probably make an educated guess on how much longer you’ll live, and decide from there.
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You’re a financial genius. If you’re the next Warren Buffet, or have a sure-fire investment opportunity, then you can start taking Social Security early and investing it on your own. It is perfectly legal to start benefits at age 62 and stash the money in your private investment account, and you don’t even have to be retired to collect these benefits. However, remember these two things. One, if you are still working while you start receiving benefits, you may have to pay income tax on your benefits. And two, by waiting you get a risk-free 7% return from the government. If you can’t do that well by yourself, you should wait.
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If benefits change. Social Security was put in place by politicians of the 20th Century, and future benefits depend on the 21st Century politicians. Economists have begun to worry that the government can’t afford all the promised payments, especially as the baby boomers retire, and there’s nothing stopping Congress from either lowering benefits or taxing away benefits from people affluent enough to postpone pay outs. If the risk of a lower benefits outweighs the benefit of the bonus, then it might make sense to take the money while it’s available.
Remember, Social Security decisions should be made based on your individual situation. What is right for some might not work for you. The Social Security Administration provides a retirement planner that can help, but a financial planner might offer more advice.
Monday, July 1, 2013
Many times, the cost of providing a full time skilled caregiver (which is estimated at $5,531 out of pocket expenses) causes a family member (or members) to step in a serve as a caregiver. But even this can cause financial issues, as the caregiver will lose his or her paycheck once pulled away from his regular job. He or she might fall behind of retirement savings, also, and there could be some difficulty returning to the workforce.
Fortunately, there are some options available for compensation for caregivers. Pennsylvania has a Caregiver Support Program that includes supportive services such as counseling, education, financial information, and monthly reimbursements depending on your needs if you care for a person over 60 with chronic dementia. If your loved one is a veteran, you can receive a monthly stipend if the veteran was injured in a military conflict after 9/11. Other benefits include access to health care insurance, mental health services and respite care of 30 days a year. For veterans of other wars, caregivers may be eligible for the VA's Aid and Attendance Pension Benefit. If your family member has long-term care insurance, it may cover some home care. Some policies permit family members to be paid, but you should ask your family member's insurance information to explain this benefit and its conditions.
If none of these other options apply to you, you can still be paid if your family member has some savings or assets. In a method that is becoming more popular as more children are caring for aging parents, a caregiver contract writes out the services that will be provided as well as the pay he or she will provide. A simple, written personal care agreement can help every party involved understand what is supposed to be done and when. It can also help avoid misunderstandings with other family members and can prove the validity of the pay and the services for the state and Medicaid if you family member ever needs to enter a nursing home.
A caregiver agreement should include when the care will begin, the tasks that will be performed (be specific and thorough, but also provide yourself with some flexibility by including a statement like "or similar tasks to be mutually agreed upon by the parties), how often you will provide the care, how much you will be paid (and when), and how long the agreement will stay in effect (again, you can provide yourself with some flexibility by saying "This agreement shall remain in force until terminated in writing by either party"). You should also include a statement that allows for the contract to be changed only by mutual agreement in writing by both parties. Once everything is written, both you and your loved one should sign and date two contracts, one for each of you.
For an example of a contract that was upheld in Missouri during a Medicaid dispute, see this example provided by Survivorship A to Z. However, just because it was upheld in Missouri does not mean it will be in Pennsylvania, and you should seek an elder law attorney to verify that it meets all tax requirements.
If a personal care agreement is not a viable option, and you are still facing financial hardship, consider seeing if your family member is eligible for programs that send an outside caregiver to the home so the responsibility isn't solely yours. Also, look into finding a job that allows you the flexibility needed as a caregiver, or try working from home. You can also hold a family meeting with siblings to discuss ways you can all share the financial burden, or even discuss receiving a larger portion of inheritance to help cover the finances of caregiving. Whatever you do, make sure your loved one, family members, and yourself are all in agreement.
Caregiver Program Links:
Pennsylvania Caregiver Support Program
VA Caregiver Support Services
Thursday, June 27, 2013
Yesterday, the Supreme Court overturned Section 3 of the Defense of Marriage Act provision barring same-sex married couples from federal benefits. Now the issue is kicked to the state politicians, and the high court’s ruling doesn’t touch the issue of having state’s recognize same-sex marriages performed outside their borders.
Pennsylvania’s definition of marriage goes back to 1996, and it defines marriage as between a man and a woman. This is to say that Pennsylvania doesn’t recognize same-sex marriages, even if they take place outside state borders. So what does this mean in terms of estate planning for same-sex couples?
Well, estate planning is done on a state-by-state basis because the laws vary by state. For example, the probate process in Pennsylvania is quick and painless, however in Florida you want to avoid probate at all costs. The tax-inheritance laws are different, too. In Pennsylvania, the rate for inheritance tax between married couples is 0%, so a $1,000,000.00 estate transferred between a husband and wife would have a $0 tax. The rate of inheritance tax between unrelated persons is 15%, leaving a same-sex couple, married in a different state,f to pay a tax of $150,000.
Additionally, some federal agencies base their recognition on the rules where marriages are officiated, but others rely on the rules of the state where the couple lives. Since Pennsylvania doesn’t recognize same-sex marriages, neither will the Social Security Administration or the IRS, and benefits won’t be extended to Pennsylvania residents.
Right now this is where Pennsylvania stands, although with the changing public opinion you should be sure to keep an eye out on the state politicians. We could have a flurry of same-sex marriage legislation coming our way.
Wednesday, June 26, 2013
While most older adults live on fixed income, they generally find that their property taxes or rent keeps increasing. Fortunately, Pennsylvania has a program that can help offset these expenses. The Pennsylvania Department of Revenue's Property Tax/Rent Rebate Program aims to help reduce the expenses that those living on fixed incomes cannot afford. Those who are 65 years of age or older, as well as widows/widowers age 50 or older and disabled individuals 18 and older, may qualify for a property tax rebate, but only if they earn up to $35,000 a year. Please note that this amount is excluding half of their Social Security income. Renters are able to receive a rebate check if they earn up to $15,000 a year, again excluding half of their Social Security income.
The deadline to apply to this program is June 30, as checks will be issued beginning July 1. If you need an application, you should call the Revenue Department at 1-888-222-9190 or go to www.revenue.state.pa.us. Applications can be downloaded at this website. If you need help completing the application, please call the Lancaster County Office of Aging at 717-299-7979.
Thursday, January 24, 2013
The role of caregiving can be both rewarding and exhausting. To handle those exhausting times, it is important to incorporate some down time in your schedule to take care of yourself. A study from Penn State and Virginia Tech showed that adult day services (ADS), which can provide services to allow for down time, significantly lowered stress levels of the caregiving family members. Adult day services can give caregivers respite by providing a center where elderly parents can be taken for a couple of hours or the entire day and picked back up later. The day programs include social activities, meals and general elderly supervision. Older adults who cannot be home alone can go into a safe supervised setting that can administer medications, provide hot meals and fun activities, and give caregivers a break. In Lancaster County there are six facilities and all give tours to caregivers to determine whether ADS is a good fit. To find out more about the adult care centers, contact one of the six in Lancaster.
Monday, January 21, 2013
Deciding who to leave your legacy to can be tricky business, but when you are dealing with a second marriage it can be even trickier. Take this example: a husband and his wife have two children, but the husband also has two children from a previous marriage. What's a fair estate plan and how can he make sure everyone is treated fairly?
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