Elder Law and Estate Planning Blog - Lancaster, PA

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?

Guess what, we all have a 100% chance of dying.  It's not the most pleasant topic, but it's bound to happen at some point.  Now, what about become disabled, what's the probability of that?  At the age of 25, a person has an 18 percent chance of being disabled.  Those over 85 have a 50% chance of having some type of dementia.  What happens if you become disabled?  Will your loved ones be left in the dark, without critical information that they don't know but should have?

That's where the idea of a Death/Disability Book comes into play.  We originally read about it in an article in the Pittsburgh Post Gazette and thought that it was worthy of sharing.  So grab yourself a colorful 2 inch and start looking for the following information to include!

Emergency Information

• Emergency Contacts - whoever you want to be contacted in case of an emergency.  Their names, addresses, phone numbers and email addresses.  You can also list your professional advisors hear (financial planner, accountant, lawyer, etc).
• Health Information - your healthcare providers, copies of health insurance information and cards, all your medications, your medical history

Estate Information

• Will - the original will is the most important document to keep on hand because it dictates how your assets will be distributed.  If your family can't find the original document, your assets may not go where you want them.
• Healthcare and Financial Power of Attorney - these documents give someone else (your agents) permission to make healthcare and money decisions for you should you become incapacitated.
• Trust Documents - if you set up a trust, these must be included.
• Funeral Arrangements - have you made them?  It makes it a lot easier on your family members if it's done in advance, just make sure they know where to find the relevant information to carry out your wishes.
• A letter of instruction - while not vital, if you have any other requests or other information that family members should know, you can write a letter telling them

Financial Information

• Taxes - do you keep a copy of last years' tax returns?  Show where these are located to make it easier to reconstruct your financial affairs.
• Insurance Policies - a summary list of all your policies, including auto, disability, homeowners, umbrella coverage, life, and long-term care.  Include the name of the carrier and contact information for the agents.
• Bank Information - again, have a summary of all of your accounts, with the institutions, types of accounts, account numbers, owners, safe deposit box numbers and keys included
• Credit Cards - note the account numbers and providers.  You can also include any membership cards to a specific store.
• Stock and Bonds - these are important assets even if they seem small!

Miscellaneous Items

• Other documents - you should consider including copies of your marriage license, birth certificate, passport, and social security card
• Passwords - a list of passwords and their corresponding accounts is crucial, especially in today's age with accounts for everything and a variety of requirements for the passwords
• Personal Effects - do you have any collectible items?  Put a list of them in this binder.  If you want, you can even include pictures of them, either in the binder or in another place that someone knows about.
• Anything else - this is your binder, include in it anything else you might think is necessary!!

Once you've created this binder, make sure a trusted individual knows where it is.  And while it does seem to be a daunting task,  imagine what the job would be like if someone else had to find all this information.  As with any major project, take it in bits and pieces over a defined period of time to lighten the load.  Anything you do, even if it isn't as exhaustive as this, will be helpful.  And your family will be eternally grateful for all the help you've given them.

With smart phones growing to be more popular, they are becoming a common target for ID theft attacks.  Here are a few things you should know to avoid any attacks.

• Your smart phone holds a lot of data, maybe even more than you computer does.  From saved passwords, to GPS tracking data, to contact lists, all the information that is valuable to you is even more valuable to criminals.
• Four in ten users will follow an unsafe link on a mobile deice this year, allowing a suspicious download or giving information too scammers.  If it's too good to be true, its a hoax.
       The most common scam is a text, supposedly from you bank, claiming something is wrong with your credit card.  They
       give you a number to call and ask for account information, but that number isn't going to be your bank, it'll be the bad
       guys.
• Scammers use QR codes (bar codes that direct you to a website when scanned by your phone) or shortened URLs (tinyurl and bitly) to make it even harder to identify suspicious links.
• Be wary of texts claiming you've just won a gift card from a popular store.  Clicking on the link could install malware which then takes over your phone.  Last year, up to 120,000 phone users fell victim to Droid DreamLight, a malware concealed in up to 24 apps in the Android Market.
• The most common scam worldwide could be on its way to the US.  Toll fraud is a malicious code that prompts your phone to order ring tones and wallpapers without your permission.  Your carrier charges you for the purchase, and the scammers collect the money.  Early detection is key, so check your phone bill for unusual charges.
• You can fight back! If you've received unwanted messages or suspect fraud, register your complaint with the Federal Trade Commission (www.ftccomplaintassistant.gov).  If you receive a fraudulent text, forward it to 7726 (which spells SPAM).  You can also download free anti-malware protection, but your best bet is to use your street smarts and ignore unsolicited downloads and text messages.  And if you're not sure whether a message is real, contact the sender independently before clicking through or giving away information.

A November report by federal health care inspectors said that the U.S. nursing home industry overbills Medicare $1.5 billiion a year for unnecessary treatments or treatments the patients never received.  What is worse is the providers who have a profit motive - the for-profit homes.  Research shows that for-profits are more likely to pursue money in all kinds of ways, even by pushing the legal envelope.  This profit motive is having an outsize affect on the quality of care, resulting in a spike in waste, fraud and abuse charges brought by federal authorities.  Federal prosecutors brought 120 civil and criminal cases against nursing homes and related individuals from 2008 to 2012.  This is twice the amount for the prior 5 years, compared with a 60 percent rise in all department cases.  All 120 cases are now resolved.

To read more about these cases and the fraud in for-profit nursing homes, visit the Bloomberg News investigation.

I recently came upon an old Forbes article about what women need to know about estate planning (read it here).  With women living longer than men, now more than ever do they need to take charge of the estate planning process, or at least they need to be an equal participant in it.  Estate planning affects women more profoundly because they generally outlive their spouses, giving them the last word about where the family's weath goes.  As a result, they need to be up to date with their estate planning and it intricacies.  Although the field is still dominated by men, widows are now able to balance a checkbook and handle the family assets.  If they do not participate in estate planning, women are far more likely to see their living standards compromised in retirement.  And since 42% of women are widowed (compared to 14% of men), they have the last word about which family members and charities the couples assets go to.

Before it is too late, women should talk to their spouses, children and even parents to avoid fights, hostility and hurt feelings.  To get the conversation started, here are some tips, but know that there are many other things you should consider.  Consult an estate planning attorney should you have more questions or want more information.

• Talk to your husband about the conversation.  Know what he wants in case he passes first, but make sure to find a gentle way to bring up the conversation.
• Talk to your children, too.  You may be surprised to hear their views on the subject.  You don't have to agree to their wishes, but it is important to know what they think.
• Learn the key deadlines and how they apply when a spouse dies.  The Forbes article lists the time frames for 2011, but it is possible that they have changed already and might be changing again in the future.  Consult an estate planning attorney to answer this and any other questions you may have.
• Find someone you can trust.  Our lives may be longer, but it also means a greater chance of suffering from a diminished mental state.  Make sure you have a friend or family member on hand to act on your behalf.

Gary Alexander, the Corbett administration official who oversees Medicaid, took a trip to Capitol Hill in December to testify on one of the most divisive issues in the country, the Affordable Care Act.  Speaking to federal legislators, he noted that Pennsylvania will delay its decision about expanding Medicaid for adults until they have the flexibility to create a program that increases affordable and cost-effective coverage.  Alexander cited "hundreds" of federal mandates that will cost money and manpower that he believes Pennsylvania does not currently have.  Alexander said the Affordable Care Act was a way for the government to micromanage the states, claiming that "We in the commonwealth have never witnessed a law so vast with such demands on state resources, and lack of federal guidance."

The hearing, in which Alexander was joined by counterparts from Louisiana and Wisconsin, was centered on Obama's plan to allow states to expand Medicaid eligibility.  All three blasted the law and its costs.  The federal government will pick up all coverage costs to start, and 90% of the tab from 2020 forward.  While Democrats say the plan will help states provide coverage to the many uninsured people with relatively low costs, Republicans say that ten percent of a huge number is still a very large number.  And given the persistent federal deficits, Corbett questioned whether Washington will be able to keep its promise.

There wasn't just negativity at the hearing.  Praise could be heard from officials from the Obama administration, Maryland and Arkansas for the expansion and its ability to offer help to people without health coverage.  Maryland Health Secretary Joshua Sharfstein said his state is projected to save nearly $2 billion because of the expansion.

Expanding Medicaid in Pennsylvania would help an estimated 542,000 new Pennsylvanians enroll, at a cost of an additional $2 to $4 billion.  By the state fiscal year 2020-2021, the estimated cost will be $883 million.  According to a study by the nonpartisan Kaiser Foundation, the federal government would pay an additional $37.8 billion over the next decade to help cover Pennsylvanians.  The expansion from the Affordable Care Act will cause for more than 40 percent of the population on a federal healthcare program, a number about the size of the total employment number in Pennsylvania.

Also at the hearing, Alexander faced sharp questions about why 89,000 children were dropped off Medicaid between August 2011 and January.  Alexander responded, saying the review was to make sure only those who are eligible were enrolled and noting that those removed were allowed to reapply.

For Alexander's full report, click here.

UPDATE: Pennsylvania still remains undecided, but other states have made their decisions.  Check out this map below for the Medicaid Expansion decisions as of January 3, 2013.

As a part of Congress's tax compromise to avoid falling down the fiscal cliff, the exemption amount for estate taxes will remain the same as it has been for the past two years.  The American Taxpayer Relief Act, passed in the House by a vote of 257 to 167, permanently sets the estate tax exemption at $5 million for an individual (adjusted to $5.12 million due to inflation) and $10 million for a couple (adjusted to $10.24 million).  With new inflation amounts, the exemption is expected to rise to about $5.2 million.

The gift tax and generation-skipping transfer tax exemptions will remain the same as last year as well.  They will be adjusted for inflation as the estate tax exemption was.

Congress, however, did make one change to the prior rules, by increasing the maximum tax rate by 5 percentage points.  This raises it to 40 percent.  Tax rates of 37, 39 and 40 percent will apply, depending on the value of the estate.

This bill and it's provisions would take effect January 1, 2013.  However, until President Obama signs it, the estate tax has technically reverted to its 2011 level of 55 percent and the estate tax exemption level has dropped to $1 million.  Still, President Obama has promised to sign the bill, and should be doing so quickly.

In the news, there has been a lot of talk about the impending "fiscal cliff," and if Congress and the administration can't strike a deal, starting tomorrow, January 1, there will be spending cuts and tax increases because of this cliff.  These changes have the potential to greatly impact many families, especially in terms of estate planning.

In the new year, the federal estate tax and gift tax exemptions will drop from their current level of $5.12 million to $1 million.  This means that if your estate values over $1 million, only the first million dollars will be exempt from tax, leaving the rest subject to tax rates that will also be increasing.  In 2012, the maximum tax rate was 35 percent; under current law it will be raised to 55%.  Tax rates have not been that high since 2001, and the exemption level was last at $1 million in 2003.

These two changes will all of a sudden cause quite a few people to worry about estate planning who weren't worried before.  Families with estates under $1 million can still relax, and those with estates valuing over $5.12 have likely already structured their wills to protect from estate taxes.  However, estates totaling between $1 million and $5.12 million are probably not ready for these changes.

There are several different techniques available to get out of the direct line of fire of the new estate tax laws.  Establishing trusts and using different insurance methods are two, but there are many others available.  The best plan of action would be to seek counsel from an estate planning attorney who knows all the available options and can establish the plan most suited for your needs.  While it's not too late to take action, moving quickly will best protect your family and the legacy you leave behind in the new year.

Unfortunately, most action taken now will likely prove to be unnecessary in the future, but how soon in the future is unknown.  Exemptions and tax rates have changed 9 times since the start of the century, and because most congressmen have estates larger than $1 million and will want to protect themselves from the high rates, it is likely that the exemption amount will raise to around $3 million.  However, the specifics of these changes and how soon they will come into effect are unknown at this time, and with so much uncertainty surrounding them, it is best to take action and protect your family as soon as possible.

The holiday season is normally a joyous time of year, but if you've recently lost a loved one, it can be hard to celebrate.  Here are a few ways to try and make the season a little more cheerful.

• Offer yourself some grace.  Remember that you are grieving and be realistic about what you expect.  You don’t have to do certain things for this holiday to be “normal” and the word ought should be left out of the season this year.  Decide what is important this year and do only that.  The other things can always be added back in the years to come.  Finally, plan ahead so that you aren’t overburdened with last minute responsibilities.
• Be kind to yourself and acknowledge limits.  Get the rest and nutrition you need.  Take care of yourself physically, as grief can be a great source of stress on the body.  Don’t numb your pain by overindulging on sweets, but also don’t deny yourself the pleasure of good food and companionship. Your loved one would want you to be smiling.  Exercise is an important stress reliever and a mood elevator.  Don’t feel obligated to accept every invitation and responsibility thrown your way; only do what feels right to you.  Follow what your heart and body are telling you, and the holidays will pass much more peacefully.
• Keep and adapt cherished traditions.  Keep traditions alive in a way that makes sense with your new reality; the possibilities are endless, whether it’s a new twist on an old tradition or a completely new one.  Do whatever feels right for you and your family.  If you are alone this year because of your loss, find a way to share the holidays with others; you may find yourself forging new bonds over shared losses.  Don’t compare your holidays to others; embrace what you still have.
• Look for joy in the tears.  Understand that when unpacking decorations, you will be unpacking both loving memories and heartaches.  Don’t deny yourself the gift of healing tears for these heartaches, and don’t be surprised if the tears come when you least expect it.  You will be remembering both the pain and the wonderful moments of your loved one’s life; celebrate these joys and the joys they brought you.  And remember, you will survive this season.

We hope you have a Merry Christmas and a Happy New Year!

In light of the recent tragedy at Sandy Hook Elementary, people are done blaming guns and starting to talk about mental illness.  As Liza Long points out in her article that went viral, "I am Adam Lanza's Mother" (read it here), that there are very few options for people with mental illnesses.  In fact, the only option they really have is to go to prison for people to start paying attention.

This lack of options, some people say, is because of government programs, like Medicaid (known as Medical Assistance in Pennsylvania).  But services for the non-poor mentally ill patients have been hit hard by the recession, and after the Supreme Court struck the mandate requiring states to expand Medicaid programs, people are worried that the Medicaid system will suffer further cuts.  These cuts cause a decrease in coverage or providers and longer waits for appointments, which in turn causes patients to be less likely to seek the help they need.

However, in light of recent events, lawmakers are making mental health services a priority to stop future tragedies.  We have to discuss the mental health aspect and find ways to provide care for the mentally unhealthy.  We can only hope that the Medical Assistance will work to cover the mentally ill, giving them options so prison is not the solution of choice and to keep everyone safe.

According to the Insurance Institute for Highway Safety, drivers over the age of 80 have the highest rate of fatal car crashes per mile, higher than even the teenage age group.  Vision problems, slower reactions and other effects of aging increase the risk of crashes and make it unsafe for many people to continue driving.  Additionally, most state legislature doesn't acknowledge the problem.  In Pennsylvania, licenses have to be renewed after 4 years instead of 8, but the renewal may be made via mail or internet instead of in person and requires no written test, eye exam, or on the road test.

Driving represents independence and freedom for many seniors, as well as providing them with mobility, so many politicians are hesitant to make the renewal process more stringent.  Since lawmakers tend to sidestep the issue, it's often up to families to take action when their loved one is no longer a safe driver.

If you suspect their driving skills are starting to falter, take a ride with your loved one, noting if he or she has trouble following traffic signals, maneuvering the car, remembering the route, or judging gaps in traffic.  If there is a problem, address it head on instead of waiting until after an accident and it is too late.  Here are a few simple tips on how to approach the subject:

• Chose the most appropriate person to first bring up the matter with your loved one.
• Unless it is clear the driver is unsafe all the time, try limiting driving instead of prohibiting it.  For example, suggest driving only during the daytime and staying off highways.
• Investigate alternative transportation options and their costs.  You can calculate how much money your family member would save by driving less or not at all and point out that these savings can be used for other modes of transportation.
• If an aging loved one resists giving up driving, let the physician or department of motor vehicles be the bad guys.
• If all else fails, you may be able to gain guardianship over your parent and get a court order to prevent him or her from driving.  You could also hide the car keys or disable the car, but some families find this option to backfire.

For more information on safe senior driving, visit http://seniordriving.aaa.com/.