Elder Law and Estate Planning Blog - Lancaster, PA

At some point in time roles are going to be reversed.  No longer will Mom and Dad be telling you that you can't buy this item or that item, but you will have to be keeping an eye on their finances.  As your parents age, they will become more likely to be a victim of a financial predator, something millions of caregivers try to protect their parents from.  This role reversal won't be easy, but here are a few tips to get started.

• Watch for red flags.  Families are unique, and so are the situations that they live in.  But when your mom or dad stops taking care of themselves, its time for adult children to speak up.  If you notice one thing, something that they're not doing but normally would, chances are that your parents are forgetting a few other things as well.
• Start small.  As your parents get older, they are going to act like teenagers at times.  You can't tell a teen what to do, and they will not want to be told how to handle their finances.  Several financial advisors recommend giving your parents a book or an audio book on financial matters to show your concern and jumpstart the conversation.  Adult children may also ask permission to see if their parents will give them access to copies of bank statements or set up online banking and automatic bill pay.  Whichever you choose, whether these ideas or your own, make sure you are showing your parents that you want to help, not take over.
• Stay in touch with people in your parents' lives.  You can't be there all the time, especially if you live in another part of the country.  But you can stay in touch with the people that your parents will see on a frequent basis, whether it be neighbors, friends, or church members.  Also make it a point to meet their financial advisor to buld trust.  The advisor will then know that you, too, want to help and can keep you in the loop about what mom and dad are doing.
• Keep siblings in the loop.  Sharing responsibilites can cause friction in some families, especially when concerns over inheritance come into play.  Try delegating different tasks to different people, for example your sister living across the country from your parents could monitor finances online while you, since you live down the street from your parents, could handle in person tasks like doctors appointments.
• Set up a power of attorney.  This legal document authorizes an agent to make financial decisions on behalf of the grantor.  If your parent is willing to sign and notarize one, it could give you greater oversight of their finances.  This can be a touchy subject, but is highly recommended so that should your parent become incapacitated, someone else can still access their finances.

As people grow and age, they often look back and wish they had done something in their life differently.  Here are the top 5 regrets from people who have reached the end of their lives.  Special thanks to Bronnie Ware for this article.

1.  I wish I'd had the courage to live a life true to myself, not the life others expected of me.
This was the most common regret of all.  When looking back at your life, it is easy to see how many dreams were left unfulfilled due to choices made.  It's very important to honor some of your dreams along the way, because once you lose your health, it is too late to fulfill them.  According to these patients, health brings a freedom that you don't know you have until it's gone.

2.  I wish I didn't work so hard.
I write this as I am at work, but this was a regret from every male patient.  They often missed out on their children's youth and their spouse's companionship.  As the women of this generation weren't the breadwinners, this regret was spoke of, but not as prevelently.  Simplifying your life will help you see that you do not need as much income as you believe.  This will also create more time for you to do things you want, making you happier and open to more opportunities.

3.  I wish I'd had the courage to express myself.
Many people supress their feelings to keep peace with others, resulting in a mediocre existence and never becoming who they were truly capable of becoming.  Interestingly, many developed illnesses related to carrying the bitterness and resentment that came from suppressing feelings.  Changing the way you are by speaking honestly raises your relationships to a new, healthier level.  Or it releases unhealthy relationships from your life.  You cannot control the reactions of others, but in either situation, you win.

4.  I wish I had stayed in touch with my friends.
You don't realize the benefits of old friends until much too late.  Many patients had become so caught up in their own lives that they let golden friendships slip away.  It wasn't until their last weeks of life that they realized the benefits of these friends, and by then it wasn't always possible to track them down.  There were many regrets about not giving friends enough time and energy.  In the end, all that remains is love and relationships.

5.  I wish that I had let myself be happier.
Surprisingly, this is rather common.  Many people chose the comfort of familiarity in both their emotions and physical lives.  Fear of change had them pretending that they were content.  These patients did not realize that happiness was a choice, and one that they did not make.  Deep within, lying on their deathbed, these people longed to laugh properly and have silliness in their life again.

Read the original article by Bronnie Ware on the Buried Life here.

On July 2, Governor Tom Corbett signed a piece of legislation that exempts farmers from inheritance tax.  This law, effective for all deaths after June 30, 2012, allows farmers to pass down their farms to their heirs without having to worry about the farm paying taxes after death.  These taxes (4.5% for children of the decedent, and 12% for siblings) left a large burden for those inheriting them, because although farmers are rich in land, they are often time poor in cash.  In order to pay the taxes, they would have to sell their farmland, causing farms to shrink in size and productivity as the family line grew longer.

When signing the bill, Corbett said that this tax has forced many families "to sell their legacy, their land and their way of life."  Now, as long as the farm is a working farm, it can be passed to immediate family members without having to pay inheritance tax.  In the past, farmers all knew of friends that had to dissolve the farm to pay inheritance tax.  Now, the nearly 63,000 farming families in Pennsylvania will be able to pass along the land and the business.

Cutting this tax is obviously cutting a source of revenue for state operation, making the budget a bit tighter.  However, agriculture is the top industry in the state, so this law could be healthier for the future of Pennsylvania.  The 8 million acres of farmland in Pennsylvania generates almost $6 billion in sales each year, and by protecting the land through eliminating inheritance tax, Pennsylvania can protect this industry.

Have you ever thought what will happen to your pet when you pass away?  Oprah has, and she set aside $30 million for her five dogs.  Not considering the dollar amounts, leaving money to ensure that Fido is taken care of in case of a tragedy is smart estate planning, and it could save him from being abandoned or sent to a shelter.  Although pets cannot be beneficiaries in a will, you can name a caretaker and set aside money for their care.

Pets aren’t the only ones being left out of estate planning.  Most people did not include their aging parents in their wills, even if that person is already providing care for them.  The probability of your parents, an older relative or an elderly friend outliving you might be small, but the consequences for not planning for their care should they outlive you can be huge.  Discuss the issue of parent care with siblings and parents before including it in your estate plan, but don’t forget about your parents completely.  Should they outlive you, they will need someone to take care of them and look out for their well-being.

Finally, most young people have multi-media libraries that are sizeable assets in their estate.  But have you thought to include them in your estate plan?  If you’re not around, who is going to get what and how will your loved ones know that?  These assets include social media accounts, photos, videos, music, even loyalty points.  Distributing and safeguarding these assets will help keep you loved ones from scrambling to close out accounts and accessing photos and music.  Password sharing is discouraged, so how to manage these accounts posthumously can be tricky, but recording your preference in your estate plan can’t hurt.

Here are the 8 most common mistakes executors make when administering an estate.  There are oftentimes other mistakes made as well, so you should seek legal advice to ensure that all matters are handled.

1.    Probating the Wrong Documents.  When most executors hear the word “probate” they think of the long, difficult, expensive process of administering an estate and want to avoid it.  But, in Pennsylvania, that is mistake number one!  Pennsylvania’s probate process is not nearly as bad as most states and is in fact fairly easy, simple, and straight forward.  When someone ways they are going to probate a will, it means that you are going to the Register of Wills and someone there will verify that the will is authentic and that you are indeed the executor.  Then, as executor, you will take an oath promising to protect and distribute the estates assets.  There will be a small probate fee, but not nearly as large as other states.
    One of the first duties an Executor must do is to make sure that you have the right documents.  These are the most recent documents, so check the safe deposit box and with the lawyer who drafted the documents at the very least to make sure there aren’t more recent documents!

2.    Distributing early without protection from liability for that distribution.  As Executor, you are personally liable for the estate and distributions.  When executors make distributions before everything else is done, the executor is personally at risk (and these distributions are known as “at risk distributions”).  This does not mean that you cannot give some money out before paying creditors and anyone that can assert a claim or the estate assets, it just means that you better make sure that you can get the money back if there has been a miscalculation!

3.    Failing to comply with probate requirements.  In Pennsylvania, like we previously mentioned, the probate requirements aren’t too strict, however there are a few things that must be done.  Once sworn in as Executor, Pennsylvania requires that everyone named in the will is at least notified that it is in probate.  Once everyone is notified, you must notify the court by filing a certification.  If you are using an attorney to help administer an estate, they will do it for you and make sure it is done correctly.  Additionally, if someone has been disinherited under a will (for example a child), they must receive notice.  People do have the right to challenge the will, so Pennsylvania law requires that everyone who is supposed to know about this does know about the will.

4.    Failure to get discount for early inheritance tax payment.  Pennsylvania gives a discount for paying the inheritance tax within 3 months, rather than waiting 9 months when the inheritance tax is due.  But just because there is this discount doesn’t mean that you should rush to pay the inheritance tax.  Sometimes, say if you’ve got a lot of cash, it makes sense to pay the inheritance early and receive the discount.  In other situations, you may be earning more than the value of the discount with the money in another investment form.  Getting the advice of an estate administration attorney will help you with this decision.

5.    Forgetting to advertise the estate.  The law requires that the naming of the executor and the creation of the estate be advertised once a week for three weeks in a paper of general circulation and in the legal newspaper of the county of the decedent’s death.  When working with a law firm like ours, this will be handled by the attorney.  This is so that if debts were owed, creditors can come forward and make their claim on the estate.  In Pennsylvania, there is a 4 to 6 year statute of limitations, meaning 3 years after the estate administration is done, a creditor could have a valid claim, but had you advertised, the creditor could have known beforehand.  Additionally, advertising the estate cuts off claims after one year.

6.    Getting help too late.  Probate and estate administration can be a complicated process and is not as simple a job as it seems.  Those who have been executors know that it can be very time consuming and difficult.  Getting both legal and accounting help can make the job less time consuming, less difficult, and less emotionally draining as well as limiting your liability exposure.  Let someone who has been through the process many times before help you through it.  If a loved one just died and you need help with estate administration, our office can help.

7.    Not meeting tax deadlines.  Within 9 months you must file a PA inheritance tax return.  In some cases, you must also file a Federal estate tax return.  They must be filed timely, or you will get in trouble!  Generally, these returns look simple, but there are many strategic issues and you have to make certain elections that can create a bit of confusion.  Equally important in when you file them is how you file them.  You want your returns prepared and filed professionally because professionals really know what they’re doing.  They can help save you because they know the red flags, the things to avoid, the documents to attach.

8.    Failing to conclude the estate.  Once executors get to the end of an estate, oftentimes they just distribute the money without ever formally closing the estate.  Before distributing assets, you can go to a court and get the okay from a judge, or if you want to skip that piece of the probate process and your family is all in agreement, you can form a family settlement.  This gives everyone records of the estate administration so that they know where assets went and how much expenses were, so that the family can agree on these and not hold the executor liable for any mistakes.  By documenting everything among family members, if later debt pops up, everybody agrees to give the money back and the executor has managed their liability.  This must be prepared by an attorney and is a very powerful tool in protecting the executor’s liability.

These mistakes are common in the administration of an estate, so the best advice we can give you is to seek legal counsel to help you through the process.

Whether you have hours, weeks, or months to find a nursing home for an elderly loved one, the task is going to be daunting.  But this will be the task for a majority of the population, as two-thirds of people over 65 will need the care given by a nursing home, according to AARP.  Just as you wouldn't move into a new house without visiting and inspecting it, you should do research on nursing facilities ahead of time if possible.  And when researching, there are several key considerations you should take.

First, look at the official stats.  Medicare rates and compares nursing homes on their website (medicare.gov/nhcompare).  Some facilities are even certified by Medicare, meaning they are inspected every year and all complaints are investigated.  Read these ratings and recent inspection reports, but don't just take them at face value.  Check out the ratings for health inspections and for staffing and see if you can find why they rank as they do.  What are the citations for and how often do they occur?  One patient accident isn't a big deal, but frequent falls could be a red flag.  If you want more opinions on the nursing home, your local Area Agency on Aging (the Lancaster County Office of Aging) or a hospital discharge planner can give you referrals on nursing homes.  Furthermore, the state's ombudsman and licensing agency should be able to tell you about consumer complaints.

Check to see how staffing is at the nursing home.  How much time are residents receiving with the nurses?  The Centers for Medicare and Medicaid Services (CMS) recommends at least 2.8 hours a day of nursing aide time and 1.3 hours with an RN or licensed practical nurse.  Ask specific questions of the staff and about care, ask how personal preferences are accommodated.  Also see whether staff work with the same patients each day because when staffers know the patients better, the quality of care is higher.  Finally, make sure to ask how the staff will deal with an unexpected event, like a power loss or a situation which requires evacuation.

Visit the nursing homes you are considering, and visit more than once.  Observe lifestyle details, like do the nurses greet patients in the hall?  Are meal eaten in the dining room and are residents enjoying the meal?  Does it smell pleasant and homey and are residents smiling?  Check rooms for cheerfulness and safety, use the bathroom to check for hot water, and inspect the kitchen for cleanliness.   Ask about anything that could affect the well being and happiness of your loved one, like are there organized outings and visits?  What activities are listed on the bulletin board?  Are there stimulating offerings like exercise classes and a library?  Snoop around (and be wary of any place that objects) and try visiting unannounced on a weekend when staffing is likely to be tighter.

Another important consideration is how close the nursing home is to you.  The biggest influence on care quality is the frequency of visits by friends and family.  Make sure you're allowed to visit when you want to fit your schedule, and to monitor care at different times.  Drop by often and sometimes without notice.  Stay late sometimes after your loved one has fallen asleep.  By coming at different times, you can see how quickly a staff member respondes to a ring for assistance, whether residents are enjoying interesting activities together in the afternoon or staying cooped up in their rooms and how much your mom or dad eats at meals.

One of the biggest factors in your decision will be cost.  The median annual rate for a semi-private room in Pennsylvania last year was $89,425.  If the move is years away, consider getting long-term care insurance.  If your loved one already has long term care insurance, find out the daily rate it covers.  This could be far less than your preferred homes and most policies don't kick in until after a 60 or 90 day "elimination period."  To keep costs down, determine if it's possible to keep your loved one at home a bit longer through a combination of health aides, adult day care, and family help.  You can also consult an elder law attorney for help with nursing home planning.  The Law Office of Shawn Pierson can help with the planning and can help get you qualified for Medicaid, known as Medical Assistance in Pennsylvania.  However, not all facilities accept Medical Assistance, so make sure your preferred facilities accept payment or else you might have to move when payments switch.

If you find that your loved one is not receiving the care he or she deserves, don't hesitate to move him or her.

For more ideas on what to look for in a nursing home or long term care facility, use the checklist found here by AARP.

In our latest e-newsletter, there was an article titled "Son Liable for Mom's $93,000 Nursing Home Bill Under 'Filial Responsibility' Law."  The same day our newsletter went out, local attorney Patti Spencer had an article in the Lancaster newspaper regarding the same topic, that a son was responsible for his mother's nursing home bill.  Because of these, we've had some questions regarding filial responsibility, namely what is it and what does it mean?  Well, here's a quick run down on what Pennsylvania's filial responsibility law entails.

Pennsylvania, as well as 29 other states, has a filial responsibility law.  Although these laws vary from state to state, they all say generally the same thing; they require adult children to provide financial support for their indigent or poor parents.  In Pennsylvania, not only do the children have the responsibility of maintaining their mother or father, but the spouse of and the parents of the indigent person hold the responsibility as well.  Caring for a person also includes financially assisting him or her, however there is an exception in the case that an individual does not have the ability to support the person financially.  Additionally, A child shall not be liable for the support of “a parent who abandoned the child and persisted in the abandonment for a period of ten years during the child's minority,” meaning a child who was abandoned for 10 years while under the age of 18 is not responsible for his or her parents' care.

In order for the filial responsibility law to be enforced, a civil lawsuit must be filed to get court-ordered judgment. The amount of the liability will then be determined by the judgment from the lawsuit.  Civil action may be taken by the indigent person or any other person, public body or agency who has interest in the care and well-being of the indigent person.  Most commonly, it is the nursing home who takes civil action.

If you are found liable and fail to comply with the order, the court will schedule a contempt hearing.  If the court determines that the individual found liable has intentionally failed to comply with the order, that individual could face 6 months of jail time.

In the past 30 years, there have been only 3 cases discussing the filial responsibility law.  However, in wake of the recession and budget woes affecting state-funded nursing home programs, nursing homes and other care facilities may turn to filial law to recover the lost funding.  You can protect yourself and your parents now through estate planning, long-term care insurance and knowing home Medical Assistance works.  Legal action for filial responsibility isn't all that common now, but the trend may change.  If you are at all concerned about this, or have more questions, call our office at (717) 560-4966 or email us at questions@piersonelderlaw.com and we will be more than happy to help.

Want to read more?  You can find our newsletter article here or the article by Patti Spencer here.  Additionally, to read the current Pennsylvania statute on filial responsibility, click here.

Even elder law and estate planning attorneys need help organizing papers.  With all the clients we see and all the documents we have, we often end up with piles of papers covering the desk.  While trying to get rid of several piles today, I came across an article in a Kiplinger's magazine on which documents you should keep and which can be safely trashed.

KEEP:  You should keep all of you old tax returns and supporting documents for three years after the filing date.  If you are audited, the IRS has the right to review tax returns filed in the past three years from the date of your most recent file.  This is known as the period of limitations and they also have the right to request supporting documentation for the income and deductions you reported during this time.

Also keep year-end investment statements and records of stock and mutual fund purchases for as long as you own them.  If you own a house, you should keep all records relating to that home, including proof of the purchase price and receipts showing the amount spent on improvements.  You can toss these documents after you sell the house.

Keep all files with information on contributions and withdrawals from IRAs and 401(k) plans.  This especially includes documents regarding nondeductible contributions so that you avoid paying too much tax on withdrawls.  For more information on how long to keep other financial records, visit BankRate.com's article.

TRASH:  Bank deposits, withdrawal slips and receipts from credit cards and ATMs can all be trashed after you check them against your monthly statement.  These guys keep coming, and nowadays most can be found online, so getting rid of them after comparing them to your statement is the smart move to keep clutter from piling up.  Another idea is to keep them only until the next one comes.  Keeping one on hand will ensure that you have one should you ever need it (for example we ask all nursing home planning clients to bring in their latest bank statements).  Also get rid of paycheck stubs after you check them against your Form W-2.

Unless you need them for tax purposes, trash monthly bills for utilities, cable and credit cards.  Again, these come monthly and keeping them all will just result in a big pile of clutter.  Make sure, however, before you trash something that it doesn't include your Social Security number, account numbers or other information you want to keep out of the hands of identity thefts.  If your documents include this information, you should shred them.

DIGITIZE:  Creating pdfs and scanning files to your computer is a great way to keep paper clutter down.  Our office has everything scanned to the computer so that the documents are easily searchable and accessible.  Smart phones are even coming out with apps that let you organize images of documents in secure, searchable archives (try the Shoeboxed app fro iPhone and Android).  You can then save these documents to a flash drive, an external hard drive, or a free, secure, online storage site.  One of my employees uses Dropbox.com to access files from her home computer and her laptop and loves the ease of its use.  Other similar programs include Manilla.com, Windows Live SkyDrive, Amazon Cloud Drive, and Apples iCloud.  All of these come with at least some space you can use for free and provide extra storage for a fee.  Manilla.com, however, provides unlimited documents to the site's secure database as long as you have an active account.

Most people don't realize that beneficiary designations indicated on any type of financial account, bank or brokerage accounts for example, supersede the instructions given in a will.  Yes, that's right.  Your beneficiary designations, if contradictory to your last will and testament override your will.  This is a mistake we see time and time again, and its one of our focuses as a law firm, to make sure all designations match your will so that all your intentions are met.

This means that your ex-wife could get your inheritance if she remains the designated beneficiary, even after you update your will.  Or it could mean you end up leaving your kids large sums of money at a very young age.  A lot of time and effort goes into planning your will so that your wealth is passed along as you please and beneficiary designations can easily destroy all of that.

Double check that your beneficiaries on all accounts match what you truly desire.  And whenever there is a significant change in your life, for example a birth or a marriage, review your beneficiary designations and your estate plan to ensure that the people you have named are the ones you would like to inherit your assets.

Among this week's news was the announcement that Joe Paterno's Last Will and Testament was sealed.  Although a rare occurrence (Paterno's is the only will sealed in the past 18 months according to county records) it is not an unusual request for high-profile individuals.  And in a death as public as Paterno's, especially surrounding the Sandusky scandal, it's no wonder that the family wants some aspect of privacy.  Which judge declared the sealing of the case file could not be determined, but the judge sealed the entire case file.

Paterno passed away from lung cancer on January 22.  Penn State paid an estimated $5.5 million to his estate in salary, bonuses, television and radio revenue and death benefits as well as forgiving the $350,000 oustanding loans and debt incurred by the Paternos.  Other details on Paterno's estate can be found on the loan court docket sheet that remains a public record and from the Penn State and state employees retirement system.

Like most wills in Pennsylvania, Paterno's will entered the probate process on April 5.  Probate is a court process in which the personal representative (or Executor) notifies beneficiaries, gathers assets, pays all debts and taxes, and properly distributes the estate.  Reasons for probate include fraud prevention and protection of beneficiaries.  In Pennsylvania, it is an efficient way to deal with estate assets and their distribution while protecting beneficiaries and creditors.  By sealing the will, the Paterno family was able to add another level of protection and privacy to the estate and to the beneficiaries who have already been through so much.

If you have any other questions about probate, visit our FAQs or check out this pamphlet on probate.  Or contact our office at (717) 560-4966 or questions@piersonelderlaw.com.

The current age for Medicare eligibility is 65 and has been 65 ever since the program was created.  However, there are currently debates over raising it in two month increments each year until 2027, when the eligibility age will reach 67.  According to a report released by the Congressional Budget Office (which can be found here) this would reduce the federal budget deficit by $148 billion over the next 10 years.  Compared to the $15 trillion of government debt, it's not a whole lot, but it is definitely quite a bit of money.

However, the cost for the 65- and 66-year-olds, their employers, and the states would be $220 billion, quite a bit more than the savings by the government.  Additionally, an estimated 25% of 65- and 66-year-olds would find themselves uninsured.  So is this really a good idea?

There are arguments for both sides.  As seen, the total costs in the long run would be higher, but it would lower the federal budget deficit, which at $15 trillion needs to happen.  It could also encourage more people to work and to keep their job until they're older so that they still have health insurance, however the CBO expects this effect to be small.  Still, this can contribute to a more thriving economy, but would also give college graduates a harder time finding a job as people are taking longer to retire and less replacements are needed in the work force.  Medicare premiums might go up because the program would lose its healthiest beneficiares (the 65- and 66-year-olds) and private insurers would suddenly be getting more older beneficiaries, increasing their premiums as well.  And not everyone would be able to turn to private insurance; an estimated 5 percent would become uninsured.

There are obviously other effects and considerations as well, including changing the early eligibility age and the full retirment age.  I really recommend that you read the full report from the Congressional Budget Office yourself as it includes a lot of good information as well as different scenarios.  I do, however, leave you with this thought, should we decrease the federal budget deficit or should we guarantee that our 65- and 66-year-olds are insured?  Both decisions affect our future.