Estate Planning Blog Articles

Estate & Business Planning Law Firm Serving the Providence & Cranston, RI Areas

Can I Be Paid for Caring for a Loved One?

AARP’s recent article entitled “Can I Get Paid to Be a Caregiver for a Family Member?” says that roughly 53 million Americans provide care without pay to an ailing or aging loved one. They do so for an average of nearly 24 hours per week. The study was done by the “Caregiving in the U.S. 2020” report by AARP and the National Alliance for Caregiving (NAC).

Medicaid. All 50 states and DC have self-directed Medicaid services for long-term care. These programs let states grant waivers that allow qualified people to manage their own long-term home-care services, as an alternative to the traditional model where services are managed by an agency. In some states, that can include hiring a family member to provide care. The benefits, coverage, eligibility, and rules differ from state to state.

Veterans have four plans for which they may qualify:

Veteran Directed Care. This plan lets qualified former service members manage their own long-term services and supports. It is available in 37 states, DC, and Puerto Rico for veterans of all ages who are enrolled in the Veterans Health Administration health care system and need the level of care a nursing facility provides but want to live at home or the home of a loved one.

Aid and Attendance (A&A) benefits. This program supplements a military pension to help cover the cost of a caregiver, who may be a family member. These benefits are available to veterans who qualify for VA pensions and meet certain criteria. In addition, surviving spouses of qualifying veterans may be eligible for this benefit.

Housebound benefits. Vets who get a military pension and are substantially confined to their immediate premises because of permanent disability can apply for a monthly pension supplement.

Program of Comprehensive Assistance for Family Caregivers. This program gives a monthly stipend to a vet’s family members who serve as caregivers who need assistance with everyday activities because of a traumatic injury sustained in the line of duty on or after Sept. 11, 2001.

Other caregiver benefits through the program include the following:

  • Access to health insurance and mental health services, including counseling
  • Comprehensive training
  • Lodging and travel expenses incurred when accompanying vets going through care; and
  • Up to 30 days of respite care per year.

Payment by a family member. If the person requiring assistance is mentally sound and has sufficient financial resources, that person can pay a family member for the same services a professional home health care worker would provide.

Reference: AARP (May 15, 2021) “Can I Get Paid to Be a Caregiver for a Family Member?”

How to Simplify Estate Planning

For most people, estate planning and preparation doesn’t rank very high on their “to do” list. There are a number of reasons, but frequently it comes down these three: (i) cost; (ii) they believe it’s just for the rich; and (iii) it’s too complicated.

Fort Worth’s recent article entitled “3 Tips to Help Simplify Estate Planning,” explains that an estate plan really is not about you. It’s about taking care of your loved ones and charities.

Without an estate plan or last will, state intestacy law determines who gets your assets. You lose control of how your wealth will be distributed.

Let’s look at three tips to make it easier and to help you prepare for the future:

  1. Work with an experienced estate planning attorney. Estate planning is not something you ask your buddy to do. “Hey, Jimmy, help me write my will.” No way. Partner with an experienced estate planning attorney, so you are confident your documents comply with state law and that the plan’s language clearly details how your wealth should be managed.
  2. Review your estate planning documents regularly. We all have planned and unexpected events in our lives, like new grandchildren, illnesses, or significant increases or decreases in your net worth that could impact wealth and how it should be distributed. Meet regularly with your estate planning attorney and review your plan to make sure it still meets your needs and intentions.
  3. Organize important documents. Make certain important documents have been created and can be located quickly, if something happens to you. Here is a list of documents you should have on file that can be accessed by your spouse or family members in case of an emergency:
  • Wills, trusts, and other important estate planning documents
  • A list of tangible and intangible property
  • A list of financial accounts and insurance policies; and
  • Email accounts, logins, or other log-in information to your PC and phone.

Estate planning is not a DIY project. You need the expertise of an experienced estate planning attorney to make certain that your wishes are carried out and that your estate plan can withstand any legal challenge.

Reference: Fort Worth (May 6, 2021) “3 Tips To Help Simplify Estate Planning”

Can a Daughter Help Parents by Buying Home?

A daughter who has free cash from selling her own home and wants to protect her parents from the worry of dying with mortgage debt, asks if buying the family home outright, before the parents die, is the best solution. It’s a common situation, reports The Washington Post in the article “Daughter seeks to help parents with mortgage, credit card debt by buying their house.” Is there a right answer?

Lenders generally don’t demand the repayment of a residential mortgage loan immediately after the death of the owner. They will, however, call the loan if the borrower’s heirs fail to make mortgage payments. As long as the mortgage payments are made in a timely manner, the loan remains in good standing. If the daughter and her siblings are making these payments, this won’t be a problem.

Depending on how the home is owned, when one of the parents dies, the surviving parent will become the sole owner of the home, if they hold title as joint tenants with right of survivorship. The surviving parent also does not have to worry about the lender, as long as they continue to make the mortgage payments. When the surviving parent dies, then the three daughters inherit the home.

In 1982, the federal government passed the Garn-St. Germain Depository Institutions Act to protect spouses and children, when the owner of a home adds them to the property’s title. This law also prevents a lender from calling the loan due, when the owner puts the title into a living trust.

As long as the mortgage can continue to be paid, there’s no need to pay it off in full or to purchase the home so parents are debt-free. When they die, the daughter can pay off the remaining loan, if she can and wishes to do so.

The daughter also notes that her parents have credit card debt. If they die and cannot pay the debt, it will die with them. However, if they own a home when they die and there is equity in the property, the creditor will expect the estate to liquidate the asset and pay off the debt.

If one of the siblings wants to stay in the home, she could take over the property, making the monthly mortgage payments and find a way to pay off the credit card debt separately. Or, if the daughter who is asking about buying the home wants to, she can pay off the credit card debts.

From a tax perspective, buying the property from the parents while they are living doesn’t afford any advantages. Extra cash could be used to pay off the mortgage and the credit card debt, but again, there are no advantages to doing so, except for giving the parent’s some peace of mind. The cost of doing so, however, will be the daughter losing the ability to use the money for anything else.

One estate planning attorney recommends that the daughters inherit the home. When they die, tax law allows them to pass down a large amount of wealth—$11.7 million for an individual and $23.4 million for a married couple. The home would also get a stepped-up basis. The siblings would inherit the home with its value at the time of death of the surviving parent resetting the basis.

If the parents bought the home for $25,000 years ago and it’s now worth $250,000, the siblings would inherit the home at the increased value. The parents’ estate would not pay tax on the home, and if the sisters sold the house for $250,000 around the time of their death, there would be no capital gains tax due.

As the law currently stands, it’s a win-win for the siblings. When the parents die, they can decide how to divide the estate, if there are no clear instructions in a last will from the parents. They can use any extra cash, if there is any, to pay the mortgage and credit card debt, and split what’s leftover. If one sibling wants to own the home, the other two could get cash instead of the home.

The sibling who wants to keep the home should refinance the loan and use those proceeds to buy out the other two sisters. The siblings should sit down with their parents and discuss what the parents have in mind for the property. An estate planning attorney will help the family determine what is best from a tax advantage. Planning is essential when it comes to death, taxes and real estate.

Reference: The Washington Post (May 10, 2021) “Daughter seeks to help parents with mortgage, credit card debt by buying their house”

Tackling Estate Plan Quarter by Quarter

Most of us know that a tax bill is typically due on April 15, and we know that our paychecks will include deductions for taxes, Social Security, and IRA or 401(k) contributions. If we are self-employed or retired, we make quarterly estimated tax payments. We plan throughout the year to be better prepared when April 15 comes around. The preparation takes place routinely over time, and the same can be done for estate planning and updating, says a recent article “Make quarterly payments to estate plan” from Victoria Advocate. It’s simple and sensible.

If we can make our plans today to make our eventual passing easier for loved ones and friends, why not divide and conquer, in a quarterly manner? Consider these quarterly “payments” to your estate plan and your family:

First Quarter: Review current estate plans with your estate planning attorney. Don’t have an estate plan? Get started. An estate plan includes a Will, Durable Power of Attorney, Medical Power of Attorney, Directive to Physicians document and any trusts you might need.

The Will, aka Last Will and Testament, is the only one of these documents to be used post-mortem. The will is used to designate an executor to carry out your wishes and designate a person or persons to serve as legal guardians for minor children.

Second Quarter: Let your family know your wishes. Open communication with family members is a gift, so they are not left guessing during critical times. Finding the right words is not always easy, so try writing out your thoughts as you prepare your estate plan. Document your wishes for burial arrangements, information they’ll need for a death certificate or obituary. Do you want to donate your organs, or will your pet need special care? Where are your important papers located? Once you’ve had all the necessary documents created and have thought through these wishes and written a memo about them, let your future executor know what your wishes are, and where they can find the information that they’ll need.

Third Quarter: Do some easy but important estate planning tasks. Review the beneficiaries listed on your accounts. Assets and accounts that pass through beneficiary designations are not controlled by the will, so this is extremely important if it’s been more than a few years since you last reviewed these documents. Your IRA, SEP, 401(k), life insurance and any accounts titled Transfer or Payable on Death probably have beneficiaries listed.

Fourth Quarter: Does your estate plan include a legacy to future generations or charities? Speak with your estate planning attorney about how to pass your estate to children or grandchildren. If you have a unique goal, trusts can be as individual as you are.

As systematically as you pay taxes and bills, work through your estate plan so that you are prepared for the two things we know will occur, regardless of how we feel about them—taxes and death.

Reference: Victoria Advocate (May 8, 2021) “Make quarterly payments to estate plan”

Does My State have Inheritance Tax?

There are several states with an inheritance tax. They include Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania. Maryland is the only state to impose both an inheritance tax and a state estate tax.

Forbes’s recent article entitled “Is There a California Estate Tax?” says that even if you live outside these states, it does not necessarily mean that your inheritance will be tax-free.

Twelve states and DC impose estate taxes. These include Hawaii, Washington, Massachusetts, Oregon, New York, Minnesota, Illinois, Vermont, Maine, Rhode Island, Connecticut and Maryland.

There may be other taxes due at the state level for those inheriting assets, investments, retirement accounts, or real estate.

The estate tax is a tax levied on the estate, when a person dies before the estate is passed on to the heirs and beneficiaries. Federal estate tax only applies to large estates, regardless of which state you live in. Estate taxes vary from state to state.

There is one state that imposes a gift tax: Connecticut. That state’s Department of Revenue Services says that all transfers of real or personal property by gift, whether tangible (like a car or jewelry) or intangible (such as cash) that are made by you (the donor) to someone else (the donee) are subject to tax, if the fair market value of the property exceeds the amount received for the property.

The federal gift tax applies to all states. For 2021, the annual gift-tax exclusion is $15,000 per donor, per recipient. A giver can give anyone else—such as a relative, friend, or even a stranger—up to $15,000 in assets a year, free of federal gift taxes.

Even if your state doesn’t have a state estate tax, there’s still a federal estate tax. This goes into effect for estates valued at $11.7 million and up, in 2021, for singles. The estate tax exemption is $23.4 million per couple in 2021.

With proper tax planning and estate planning, you have the ability to pass an estate much larger than this without being subject to the federal estate tax. The estate tax starts at 18% and goes up to 40% for those anything over the $23.4 million threshold.

Talk to an experienced estate planning attorney for questions about taxes and estate planning.

Reference: Forbes (May 4, 2021) “Is There a California Estate Tax?”

Will Mediterranean Diet Stave Off Alzheimer’s?

Researchers at the German Centre for Neurodegenerative Diseases in Bonn found the Mediterranean diet could protect the brain from disease triggers linked to Alzheimer’s, specifically protein deposits and the rapid loss of brain matter.

Barchester’s recent article entitled “Mediterranean diet could lower risk of dementia, study suggests” reports that Alzheimer’s disease is the most common form of dementia, affecting between 50 and 75% of people who are diagnosed with the condition.

Worldwide, approximately 50 million people have dementia. There are roughly 10 million new cases every year.

Alzheimer’s disease is the most common form of dementia and may contribute to 60–70% of cases.

Dementia is one of the primary causes of disability and dependency among older people worldwide.

There are physical, psychological, social, and economic impacts on people with dementia, as well as on their careers, families and society at large.

The recent German study results were published in the journal Neurology. The research involved 512 subjects, with an average age of 70 years. The participants were asked to fill out a questionnaire about the foods they regularly ate. Those who ate a considerable quantities of fish, vegetables and fruit, and only occasionally consumed foods considered less healthy, such as red meat–were given high scores on a scale used by the researchers.

Participants then underwent MRI brain scans and participated in tests examining cognitive functions, such as memory. The study also looked for levels of amyloid beta proteins and tau proteins in the cerebrospinal fluid. These are well-known signs of Alzheimer’s.

The results showed that those with the unhealthiest eating habits had more pathological levels of these biomarkers, when compared with those who regularly ate a Mediterranean diet.

In addition, individuals who regularly ate a significant quantities of fish, fruit and vegetables performed better in memory tests.

The lead author of the study, Tommaso Ballarini, expanding on the findings and explained: “There was also a significant positive correlation between a closer adherence to a Mediterranean-like diet and a higher volume of the hippocampus. The hippocampus is an area of the brain that is considered the control centre of memory. It shrinks early and severely in Alzheimer’s disease.”

The researchers are looking to re-examine the same study participants in four to five years, to have further insights into how nutrition can impact brain aging and health over time.

Reference: Barchester (May 10, 2021) “Mediterranean diet could lower risk of dementia, study suggests”

Should Vets Be on Look-out for COVID Vaccine Scams?

Officials from Operation Protect Veterans — a joint effort from the U.S. Postal Inspection Service and AARP that works on scams targeting veterans and military members — said they have seen a recent uptick in the number of illicit offers for veterans to “cut in the vaccination line,” if they provide cash to third-party groups.

Military Times’ recent article entitled “Warning: Post Office sees rise in COVID vaccination scams targeting veterans” says that the group also warned of scammers offering “cash payments or other incentives around obtaining a COVID vaccination.”

VA officials will reimburse veterans for the cost of vaccines by the department’s Foreign Medical Program. However, they do not help them find vaccine appointments.

Legislation approved last month by Congress allows all veterans, their spouses and caregivers to get coronavirus vaccines through the Department of Veterans Affairs free of cost. The timing and availability of those shots depends on local supplies.

However, VA officials have stressed the fact that people do not need to pay to receive a dose. Any outside group promising quicker delivery in exchange for cash are taking advantage of confused or frustrated veterans.

“In addition to many of the same scams that fraudsters use to target veterans, we’re now seeing more ‘timely’ scams, like those related to COVID,” said Chief Postal Inspector Gary Barksdale in a statement.

“And as May is Military Appreciation Month, it’s a great time for everyone to become informed and spread the word about scams targeting veterans in order to, in some small way, help repay the tremendous debt we all owe those who have served.”

An AARP survey from 2017 found that vets are twice as likely to be victims of scammers as the general public. The survey found that one in six veterans reported losing money to a bogus offer of benefits or assistance.

The U.S. Postal Service cautions vets not to divulge their personal information over the phone to strangers, especially bank account numbers, credit card numbers or Social Security numbers.

Moreover, they also said any veteran with questions about an unsolicited offer or program should check out the deal with a family member, friend, or local Veterans Affairs office.

Anyone who demands veterans act immediately on such a transaction are like scammers.

More information on scams and protections for vets is available at the Postal Inspection Service web site.

Reference: Military Times (April 30, 2021) “Warning: Post Office sees rise in COVID vaccination scams targeting veterans”

How to Protect Loved Ones from Elder Abuse

Predators had an open season on the elderly during the pandemic, as isolation necessitated by COVID severely limited family member’s ability to visit in person. In some instances, caregivers themselves were the predators, and manipulation on important legal documents, including durable power of attorney, trusts, wills and ownership of homes has occurred. All this was reported the article “Warning: Isolation Of Your Aging Parent May Be A Red Flag” from Forbes. The enforced isolation has created worrisome situations for all concerned.

If you haven’t seen your parents or grandparents for a year or more, and are all fully vaccinated, one expert strongly encourages visitation, as soon as is possible. Use the visit to review all of their legal matters and talk about how to increase engagement and end the isolation.

Consider the following a checklist of what needs to be done at that first visit:

Look for any signs that anyone who had access to loved ones may have taken advantage of their isolation during the past year. Don’t assume the best behavior of everyone around them. It’s not how we like to think, but caution needs to be exercised in this situation.

Check on their will and trusts. The pandemic has reminded everyone that life is fragile, and it’s important to go over legal documents or, if they don’t exist, create them. Find out if anyone has pressured family members to change legal documents—if they have been changed in the last year and you weren’t told about it, find out what happened.

If aging parents do not have a will or trusts, or these documents were altered in your absence, speak with an estate planning attorney who can create a new estate plan. Make sure all copies of older wills are destroyed. At the same time, this would be a good time to have their powers of attorney, healthcare proxy and living wills updated.

If your parent or grandparent lives on their own, find out if they are now in need of any caregiving. A year is a long time, and elderly people who started out fine during the epidemic may have had changes in their health or ability to live independently. Go see for yourself how they are managing. Is the house clean? Are the stairs too steep to be managed?

Not everyone will be able to return to “normal” without some help. Senior centers, gyms and recreational facilities have been shut down for a long time. They may need some help getting back into a routine of socializing and exercising.

The end of enforced isolation can also mean the end of an easy cover for anyone who was using isolation as a protection for financial elder abuse or any other type of abuse.

Isolation itself is a form of abuse, including not allowing others to visit in person or speak with a parent alone. You can overcome this by being engaged with family members on a regular basis, by phone, video visits or, if you are able to, more frequent in person visits.

Reference: Forbes (April 23, 2021) “Warning: Isolation Of Your Aging Parent May Be A Red Flag”

Should You Get Medical Power of Attorney?

The pandemic has created awareness that being suddenly incapacitated by an illness or injury is no longer a hypothetical. The last year has reminded us that health is a fragile gift, regardless of age or any medical conditions, explains the article “Now Is the Time to Protect Your Health Care Decision Making Rights” from Kiplinger. Along with this awareness, comes an understanding that having control over our medical decisions is not assured, unless we have a well-considered health care decision-making plan created by an estate planning attorney, while we are well and healthy.

Without such a plan, in the event of incapacity, you will not have the opportunity to convey your wishes or to ensure they will be carried out. This also leaves the family in a terrible situation, where siblings may end up in court fighting against each other to determine what kind of end-of-life care you will receive.

The best way to exercise your medical decision rights will vary to some degree by your state’s laws, but three are three basic solutions to protect you. An estate planning attorney will be needed to prepare these properly, to reflect your wishes and align with your state’s law. Do-it-yourself documents may lead to more problems than they solve.

Living Will. This document is used when you are in an end-stage medical condition or permanently unconscious. It provides clear and written instructions as to the type of treatments you do or do not want to receive, or the treatment you always want to receive in case of incapacity.

Health Care Durable Power of Attorney. The health care durable POA is broader than a living will. It covers health care decisions in all situations, when you are not able to communicate your wishes. You may appoint one or more agents to make health care decisions, which they will base on their personal knowledge of what your decisions would be if you were able to speak. Just realize that if two people are named and they do not agree on the interpretation of your decision, you may have created a problem for yourself and your family. Discuss this with your estate planning attorney.

Health Care Representative Laws. There are laws in place for what occurs if you have not signed a Health Care Durable Power of Attorney or a Living Will before becoming incompetent. They are intended to fill in the gap, by authorizing certain family members to act on your behalf and make health care decisions for you. They are a solution of last resort, and not the equal of your having had the living will and/or health care durable power of attorney created for you.

If the statute names multiple people, like all of your children, there may be a difference of opinion and the children may “vote” on what’s to happen to you. Otherwise, they’ll end up in court.

The more detailed your documents, the better prepared your loved ones will be when decisions need to be made. Share your choices about specific treatments. For instance, would you want to be taken off a ventilator, if you were in a coma with limited brain function and with no hope of recovery? What if there was a slim chance of recovery? The decisions are not easy. Neither is considering such life or death matters.

Regardless of the emotional discomfort, planning for health-care decisions can provide peace of mind for yourself and loved ones.

Reference: Kiplinger (April 29, 2021) “Now Is the Time to Protect Your Health Care Decision Making Rights”

Should I Be Paying with Personal Checks?

More than 14.5 billion checks, totaling $25.8 trillion, were written in 2018, according to the Federal Reserve. Although that number has decreased by about 7% every year since 2015, checks are still being written by Americans, including seniors.

Money Talk News’ recent article entitled “Is Writing a Check Still Safe?” says that in an era of identity theft and bank fraud, how safe is writing a check? Remember, when you pay by check, you are handing a piece of paper with your bank account number and other personal details like your name and address, to another person. This is often a complete stranger! Checks can be forged, and identity thieves could steal your personal and banking details from a paper check. Let’s look at what you need to know about writing a check in 2021 — and how to minimize your risk.

Banks apply security measures, like watermarks and gradient backgrounds, to prevent checks from being reproduced by fraudsters. This also lets financial institutions and businesses validate paper checks easily. In 2018, measures such as these prevented 90% of attempted fraud, according to the American Bankers Association. Nonetheless, check fraud—which includes forgery, theft, and counterfeiting—accounted for $1.3 billion that year.

Know that the risk of trouble increases, if you don’t specify a recipient on the check. If you write a check to “cash,” anybody who gets a hold of it could cash it. If you need cash, it’s safer to use your debit card at an ATM or visit your bank and write a check out to yourself.

Seniors are more likely to still write paper checks, and because the elderly are more likely to be the targets of financial fraud than the general population, check-writing can compound their risk. Here are some steps you can take to safeguard your information and reduce your risk of fraud:

  1. Complete the “payee” line in full, along with the current date on every check you write in ink.
  2. Restrict the information pre-printed on your check to just your name and address, and don’t include your birth date, phone number, or driver’s license number. If a merchant requires these details, you can always write them in.
  3. Keep your checks in a safe place, not in your purse or briefcase, which can be lost or stolen; and
  4. Watch your bank account activity regularly. By keeping an eye on your finances, you also reduce your risk of fraud.

Even if you prefer paying electronically, you probably shouldn’t dismiss checks altogether. There are small businesses that still don’t accept debit or credit cards. If they do, they might charge a fee for it.

Checks also offer a paper trail, so they’re usually preferred for a down payment on a home or an IRS tax bill. Therefore, if there’s an issue, you’ll have a copy of the deposited check and a record of when payment was made, received and applied.

Of course, no payment method is 100% fraud-proof. However, with proper handling, checks are an extremely safe method of banking, as they have been for many years.

Reference: Money Talk News (Feb. 17, 2021) “Is Writing a Check Still Safe?”