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Estate Planning Blog Articles

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

Role of Estate Planning for the Great Wealth Transfer

The “Great Wealth Transfer” refers to the significant shift of wealth expected to occur over the next decade. According to a recent report by Altrata, individuals with a net worth of over $5 million are set to pass on nearly $31 trillion to the next generation. This monumental transfer of wealth will impact various sectors, including family offices, financial services, luxury goods and nonprofits.

What Is the Importance of Estate Planning to the Great Wealth Transfer?

Estate planning is essential to ensure that your wealth is transferred according to your wishes. Your assets could be subject to legal disputes, taxes and other complications without a proper plan. Estate planning provides clarity and security for your loved ones, helping to preserve and protect your legacy.

Who Benefits from the Great Wealth Transfer?

While the media often focuses on Millennials and Gen Z, the Altrata report highlights that Generation X is first in line to inherit. Now in their mid-to-late 40s, these individuals are set to receive significant inheritances from their wealthy parents. Younger generations, including Millennials and Gen Z, are more likely to inherit from grandparents, typically resulting in smaller sums.

What Challenges Do Wealthy Families Face?

Wealthy families face unique challenges during the wealth transfer process. Some of these include:

  • Succession Planning: As families become more globalized, succession planning grows more complex. It’s crucial to have advisors who understand international laws and regulations.
  • Generational Differences: There can be a disparity between the values and aspirations of wealth holders and their younger benefactors. Clear communication and planning can bridge this gap.
  • Early Transfers: Wealth is increasingly being passed on during the lifetime of the head of the family. This requires early engagement and preparation to manage assets effectively.

Can Estate Planning Help?

Estate planning can address these challenges by providing a structured approach to wealth transfer. Here are some key benefits:

  • Minimize Taxes: Proper planning can help minimize estate taxes, ensuring that more wealth is passed on to your heirs.
  • Avoid Legal Disputes: Clear documentation of your wishes can prevent legal battles among family members.
  • Protect Beneficiaries: Estate planning can protect beneficiaries from potential creditors and other financial risks.

Key Estate Planning Steps to Take

First, consult an estate planning attorney to create a comprehensive plan tailored to your needs. Review your assets, including properties, investments and personal belongings. Set clear goals for how you want your assets distributed and who will manage them. Finally, update your estate plan regularly to ensure that it remains relevant as your life changes.

Take Control of Your Legacy Today

The Great Wealth Transfer is a significant event affecting millions of families and the US economy. If your family will be part of this wealth transfer, understand that proper estate planning is a must to reduce your tax burden and see your wishes go into effect.

If you haven’t developed an estate plan, now is the time. Contact our law firm to schedule a consultation and learn more about creating a plan that protects your wealth and provides for your loved ones.

Key Takeaways

  • Secure Your Legacy: Ensure that your wealth is transferred according to your wishes.
  • Minimize Taxes: Proper planning can reduce estate taxes, preserving more for your heirs.
  • Avoid Disputes: Clear documentation helps prevent legal battles among family members.
  • Adapt to Changes: Regularly update your plan to reflect life changes.

Reference: Altrata (Jun. 11, 2024) “Family Wealth Transfer 2024”

How to Create a Caregiver Contract

Taking care of elderly parents is rewarding. However, it’s also challenging. Many families face the decision of whether to hire a professional caregiver or take on the responsibility themselves. According to ElderLawAnswers, creating a caregiver contract can provide clear communication and fair compensation for all involved.

What Is a Caregiver Contract?

A caregiver contract, or personal care agreement, is a formal agreement between the caregiver and the elderly individual receiving care. This contract outlines the duties, compensation and other important details of the caregiving arrangement. It’s a legal document that can help prevent misunderstandings and financially protect both parties.

Why Is a Caregiver Contract Important?

One of the primary benefits of a caregiver contract is that it ensures the family member providing care is fairly compensated and reduces family tension. A caregiver contract can also be an essential part of Medicaid planning. By compensating the caregiver, the elderly individual may be able to spend down their savings and qualify for Medicaid long-term care coverage assistance.

How to Create a Caregiver Contract

If you’re considering becoming a caregiver for your elderly parents, starting with a well-drafted caregiver contract is essential. This legal document can provide peace of mind and ensure that both the caregiver and the elderly individual are protected. Consider five key steps to take when drafting yours.

1. Consult an Elder Law Attorney

Be sure to consult with an elder law attorney when you want to create a caregiver contract. They can verify that the contract is legally binding and provide guidance on meeting other goals through the contract, such as qualifying for Medicaid.

2. Define Caregiver Duties

The contract should clearly outline the caregiver’s duties. This can include tasks such as driving to doctor’s appointments, grocery shopping, and helping with bill payments. It’s important to cover all potential needs, even those that might not be necessary now. This way, you avoid any stress or confrontation over a likely expansion of duties in the future.

3. Establish Payment Terms

Payment for caregiver duties can be made in lump-sum or regular installments. For Medicaid purposes, the compensation must not be excessive. It should align with what other caregivers in your local area are earning. If your payment exceeds normal rates, the Medicaid administration may determine part or all of it to be a gift rather than payment. This could prevent you or your elderly loved one from qualifying for government assistance.

4. Address Tax Considerations

Income received by the caregiver is taxable. This means you must fully factor in payroll, federal income and other potential taxes. Calculate tax withholding properly to stay on the right side of the law.

5. Explore Other Payment Sources

If the elderly individual cannot afford to pay the caregiver, other sources such as long-term care insurance or state and federal programs may be available. It’s worth checking with local agencies to explore these options.

What are the Benefits of a Caregiver Contract?

A caregiver contract provides numerous benefits, including:

  • Clarity and Structure: Outlining duties and payment terms prevents misunderstandings and ensures that everyone is on the same page.
  • Financial Protection: Fair compensation for the caregiver and potential Medicaid planning benefits.
  • Emotional Relief: Reduces tension among family members by providing a clear, fair arrangement.

Contact our elder law firm today to learn more about creating a caregiver contract or to start planning for your family’s future. Take the first step towards ensuring that your loved one’s care and your own financial security.

Key Takeaways

  • Fair Compensation: Ensures that the family member providing care is fairly compensated, reducing potential family tensions.
  • Medicaid Planning: Helps in spending down savings to qualify for Medicaid long-term care coverage.
  • Clarity and Structure: Prevents misunderstandings by clearly outlining duties and payment terms.
  • Tax Considerations: Addresses the tax implications of caregiver income.
  • Financial Protection: Provides financial security and peace of mind for both the caregiver and the elderly individual.

Reference: ElderLawAnswers (Feb. 13, 2023) “Caregiver Contracts: How to Pay a Family Member for Care”

Single and Over 50? Estate Planning Is a Must

Estate planning might seem like something only families need to worry about. However, it’s just as crucial for single people, especially those over 50. Without a plan, your assets and healthcare decisions could end up in the hands of the state or distant relatives you barely know. Kiplinger makes the case that estate planning is essential for single people’s well-being and control over their assets.

What Happens without an Estate Plan?

If you pass away without an estate plan, the courts will distribute your property according to state laws. The state will look for your next of kin, which could mean your assets end up with distant relatives. If the state can’t find any relatives, it may claim your assets itself.

What’s more worrying is what happens if you’re indisposed. A spouse, parent, or child will normally make your financial and healthcare decisions if you cannot do so. Absent such a person, the state will appoint someone you probably don’t know to be responsible for you.

Choose Someone to Make Your Healthcare Decisions

A healthcare power of attorney is essential for single people. This document allows you to designate someone to make medical decisions on your behalf if you can’t. You can choose a trusted friend or relative who understands your wishes. Combine a healthcare power of attorney with an advanced healthcare directive to lay out your values, wishes and end-of-life care preferences.

Maintain Control of Your Finances

A financial power of attorney designates someone to handle your finances if you cannot do so. This person will pay your bills, manage your accounts and make financial decisions on your behalf. When you recover from an event that leaves you indisposed, you’ll be much better off having had a trustworthy financial power of attorney.

How Do You Plan Your Inheritance?

Creating a will is the foundation of an estate plan. It lets you decide who inherits your property, whether friends, charities, or other organizations. You can even make provisions for your pets and specify who should care for them. By naming an executor you trust, you can rest assured of your wishes going into effect.

The Importance of Trusts

While a will is the basis of an estate plan, trusts are vital to achieve specific goals. A revocable trust can avoid probate, the court process of validating a will and directly fund goals that are important to you.

State Inheritance Taxes

While federal estate taxes may not concern many, state inheritance taxes can be significant. Many states have lower exemption limits and impose taxes on property left to non-family members. Planning for these taxes is crucial to ensure that your beneficiaries receive the intended amount of your estate.

Can You Pre-Arrange Your Funeral?

You have broad leeway to prearrange your funeral in your will. You can specify whether you want to be cremated or buried and even arrange the details with funeral homes or cemeteries. Documenting your wishes ensures they are followed, preventing confusion or conflict among loved ones.

Who Will Take Care Of You?

Decide whether you want to stay at home with the help of in-home care services or move to a nursing home, if necessary. If you choose to stay at home, making accessibility modifications to your home can go a long way toward making single living practical in later life. Good estate planning can also help you reserve funds for these eventualities.

We Provide Estate Planning for Single People

Estate planning for single people over 50 isn’t just about distributing assets but also about securing the quality of life in your later years and protecting your wishes. Don’t leave your future to chance; contact us today to schedule a consultation and start crafting an estate plan tailored to your unique needs.

Key Takeaways:

  • Ensure That Your Wishes Are Respected: Without a plan, the state decides what happens to your assets and healthcare.
  • Designate Decision Makers: A healthcare power of attorney and financial power of attorney ensure that trusted individuals make decisions if you’re incapacitated.
  • Direct Your Inheritance: A will allows you to specify who inherits your property, including friends and charities.
  • Pre-Arrange Your Funeral: Planning your funeral in advance ensures that your wishes are followed and relieves your loved ones of this burden.
  • Prepare for Long-Term Care: Planning for long-term care, including funding and home modifications, is essential for maintaining independence.
  • Protect Yourself in Relationships: Keep finances separate and avoid giving control to new partners too quickly.

Reference: Kiplinger (May 21, 2024) “10 Things You Should Know About Estate Planning for Singles”

Back to School Planning to Protect Your Kids

As the school year kicks off, life can get hectic for parents. Between juggling school schedules, extracurricular activities and daily responsibilities, it’s easy to overlook important tasks. According to Kiplinger, one of the most crucial forgotten tasks is using estate planning to safeguard your child’s future from unforeseen circumstances. As your minor children return to school and work toward their future, it’s the perfect time to do your part.

Why Should You Plan for Your Child’s Future?

Every parent dreams about their child’s future; you might have ideas about the college they will attend, the career they will pursue, or the values you want to instill in them. However, have you considered what would happen if you were no longer around to guide them? It’s not a pleasant thought. However, every parent must ensure that their children will always be secure.

Estate planning can help you make your wishes felt even when you’re gone. Single or unmarried parents can use an estate plan to decide the guardians for their minor children rather than the state deciding. Trusts can set aside assets to fund specific goals.

What are Goals for Your Child?

Think about the goals you have for your child. Do you want them to achieve a higher education? Learn a valuable trade? Maybe you hope they will start their own business or spend time volunteering for important causes. Your goals can shape the kind of estate plan you create.

Can an Estate Plan Help?

An estate plan can help in many ways. An estate plan allows you to document your own values and goals for using money through how it is distributed to your children. You can create a plan for your child’s education, whether it is college or trade school. You can also incentivize them to achieve certain milestones, like maintaining a job or participating in charitable activities, by offering financial rewards. If experiencing the world is something you value, you can set aside money for travel or other experiences.

One of the most critical opportunities estate planning trusts offer is an alternative to the unlimited lump sum payment. Eighteen-year-old new adults are rarely ready to receive a five-, six-, or seven-figure payment all at once.  This lump-sum payment occurs when parents fail to plan for inheritance or settlement money or when parents have listed minor children as life insurance or retirement plan beneficiaries and pass away unexpectedly. Lacking the financial savvy to appropriately use a large sum of money, new adults often squander the money or develop an unhealthy, unsustainable lifestyle. As such, structuring the assets you leave behind to minor children through an estate plan is invaluable.

What Is a Continuing Trust?

One useful tool in estate planning is a continuing trust. A continuing trust can hold and manage money for your children until they reach a certain age or achieve specific goals. This can prevent them from receiving a large lump sum at 18, which they might not be mature enough to handle. They can instead receive smaller distributions over time, which can help them learn financial responsibility.

How Does a Continuing Trust Work?

A continuing trust allows you to decide your children’s ages and amounts for disbursements. This type of trust can be particularly beneficial if your child is still a minor or if they might struggle with financial responsibility. It can also protect your child’s inheritance from being squandered on unnecessary expenses.

What are the Benefits of a Continuing Trust?

Continuing trusts are especially helpful in protecting minors from inheriting large sums of money they might not be ready to manage. It can also provide safeguards for children who might struggle with financial decisions or face risks from addiction or lawsuits. The trust ensures that the money is used responsibly and can support your child’s future in a meaningful way.

What are the Potential Issues with Continuing Trusts?

While continuing trusts have many benefits, they need to be carefully drafted. There might be situations where your child needs a large sum of money, and the trust doesn’t allow it.  Managing a trust also takes time and money. Trustee fees and income taxes can add up, so it’s essential to consider these costs. You need to choose a trustee who can manage the trust effectively and has your child’s best interests at heart.

What Other Types of Trusts Can Help?

Other trusts can support your child’s future. Health and Education Exclusion Trusts (HEETs) can cover educational and healthcare costs. Incentive trusts can motivate your child to achieve goals, like getting good grades or starting a business.

Beneficiary-controlled trusts give your child some control over their inheritance, while protecting it from creditors and other risks.

Start Planning Your Minor Children’s Future

Creating a comprehensive plan for your child’s future might seem daunting. However, it’s an essential step in protecting it. Contact our law firm today to schedule a consultation and get started.

Key Takeaways

  • Protect Your Child’s Future: Ensure that your child’s financial and emotional security through proper estate planning.
  • Tailored Trusts: Set up continuing and other specific trusts to responsibly manage and distribute your child’s inheritance.
  • Controlled Inheritance: You can control when and how your child receives their inheritance, avoiding large sums at a young age.
  • Motivate Achievement: Utilize incentive trusts to encourage educational and personal milestones.
  • Professional Assistance: Gain peace of mind by collaborating with an estate planning attorney to create a thorough and effective plan.

Reference: Kiplinger (Nov 18, 2023) “To Protect Your Kids, Consider These Estate Planning Steps”

What are Risks of a DIY Estate Plan?

The number of online tools purporting to create estate plans easily and cheaply makes it tempting to forgo working with an estate planning attorney, but the long-term consequences of a DIY estate plan could be disastrous. A recent article from mondaq, “Risks of DIY Estate Planning” takes a close look at what can go wrong.

Estate and tax laws are both complicated and nuanced. Without an experienced estate planning attorney overseeing the creation of an estate plan, a homegrown plan isn’t likely to achieve the desired results. In addition, chances are good it won’t follow state law. If a last will and testament is found to be invalid during probate, it’s as if there was no will at all.

Estate planning needs to be created for each person’s unique situation. Do family members get along, or should the estate plan be designed to be litigation-proof? Are there large assets held in trust or corporations with complex tax consequences? If there are family members with special needs, have the proper trusts been established to protect them over their lifetimes?

Tax planning is often a significant part of an estate plan. Depending on your state and where you own property or businesses, your estate must consider many different types of taxes. Transfer tax, capital gains taxes, income taxes, and estate taxes are just a few of the taxes to be addressed. If the estate plan doesn’t dovetail with tax liabilities, beneficiaries could find themselves with a far smaller inheritance than anticipated.

Today’s modern family is not as straightforward as in the past. Families come in many different variations, all of which have their own special challenges. Blended families are fairly common, and a traditional “I love you” will, where one spouse leaves the other everything and vice versa, may result in some children being disinherited. Same-sex married couples with children need to be sure their children, biological and adopted, are protected with an estate plan designed to protect all members of the family.

Comprehensive estate plans should address asset distribution issues, guardianship for minor children, and name an executor and heirs. A Power of Attorney is needed so spouses may be involved in each other’s healthcare. Living Wills are required to clarify wishes for end-of-life care, as are Advanced Medical Directives. There are a host of documents to be created and decisions to be made, all of which require the knowledge and experience of an established estate planning attorney.

Reference: mondaq (July 1, 2024) “Risks of DIY Estate Planning”

Celebrity Estate Planning Mistakes to Avoid

It’s hard to miss the major mistakes celebrities make—their lives and deaths are public and not always pretty. Expensive mistakes on a grand scale aren’t what most of us deal with, but there are good lessons to learn from their mistakes, says a recent article from Market Watch, “Sharon Stone’s missing $18 million, Prince’s estate back in court: what to learn from celebrity estate mistakes.”

Eight years after Prince’s death, his estate is back in court, while Sharon Stone was in the news when she revealed $18 million in savings disappeared while she suffered a life-threatening illness more than two decades ago. For conservatorship stories, while we aren’t hearing much about Britney Spears anymore, Jay Leno has filed for conservatorship for his wife Mavis, who has dementia, and musical legend Brian Wilson of the Beach Boys faced conservatorship issues when his caretaker wife died, and another caretaker had to be named.

We expect people with great professional success to be surrounded by a small army of trusted caretakers, estate planning attorneys, accountants, managers, and others. And we’d also expect them to want to keep as much of their lives private as possible. But as headlines show, people who are incredibly talented performers aren’t necessarily skilled in the legal and business aspects of their lives.

In 2001, Sharon Stone suffered a stroke. It took seven years for her to overcome the effects of the stroke, and she counted on others to manage her affairs. When she was finally able to start taking control of her life, she found everything had been put into someone else’s name, and $18 million was missing from her bank account.

While she’s not forthcoming with details, this was likely a trusted person abusing their role as Power of Attorney, where a fiduciary was appointed without enough oversight. For regular people, an estate planning attorney could create a plan where, in addition to a Power of Attorney for certain accounts, like running the household, more considerable assets are placed in a trust, and the trustee is not the same person as the POA. Checks and balances need to be built into an estate plan to protect individuals in case of incapacity.

In cases where the fiduciary has performed poorly, and a family member challenges the results, the results are common. When the court reviews the matter, changes can be made to appoint another person to the POA. Courts can also step in to take over another person’s finances, but it usually doesn’t happen until after significant damage has been done.

A meeting with an estate planning attorney should include discussions about who is qualified to serve as a Power of Attorney and how their actions may be reviewed. In many instances, trust is not the issue, but competence is. Are they capable of managing the affairs of an incapacitated person? If not, another person should be selected, regardless of whose feelings might be hurt by the decision.

Reference: Market Watch (July 13, 2024) “Sharon Stone’s missing $18 million, Prince’s estate back in court: what to learn from celebrity estate mistakes”

Does an Estate Plan Help with Taxes for Business Owners?

The current lifetime exemption (the amount of assets an individual may transfer without paying federal gift or estate tax) of $13.61 million per person (and $27.22 million per married couple) is expected to revert to pre-Tax Cuts and Jobs Act level of $5.6 million per person and $12.2 million for married couples. According to a recent article, “3 Underutilized Estate Planning Strategies for Business Owners,” from Wealth Management, the time to take advantage of these historically high levels is now.

This is of particular importance for anyone whose wealth reaches these thresholds or who is planning on selling their business in the next year and a half if the sale could put them above these gross estate thresholds. Every dollar over that lifetime exemption will be taxed at a 40% tax rate upon death. This can be avoided with proper estate planning.

Three estate planning strategies detailed here take time to complete, and the IRS is known to scrutinize planning techniques that are done after a letter of intent (LOI) is signed. These strategies should be implemented before documenting an offer or drafting an LOI, ideally six to eight months before a transaction occurs.

The IRS has stated there will not be any “claw backs” if the estate tax exemptions fall to pre-2017 levels. This clear imperative makes this the opportune time to get these strategies underway without delay. Your estate planning attorney will know what works best for your unique situation, but these three are fairly common.

Spousal Lifetime Access Trust, or SLAT, is used to remove assets from the taxable estate so they aren’t subject to estate tax at death while retaining the ability of the spouse to access assets for the couple. This is despite not having a retained interest in the trust as long as the spouse is living and you are still married to said spouse.

A SLAT may be especially helpful for couples who aren’t ready to transfer wealth out of their estate and are concerned about having access to their assets. Remember that you’ll need to try not to use any of these funds until you’ve exhausted the money in your personal name.

A Grantor Retained Annuity Trust (GRAT) transfers the future growth of assets out of the taxable estate either outright or into a trust for descendants. The creator of a GRAT retains an interest in trust assets for a set period through the receipt of an annual annuity payment until the value of the asset originally put into the GRAT is returned. Basically, the GRAT pays back the money that went into the trust over the term of the trust plus interest. However, all future appreciation placed into the GRAT grows without being subject to federal gift or estate tax.

Sale to Defective Grantor Trust or Installment Sale is another strategy for business owners. This strategy is more effective if the timing of the business sale is not definite. Here’s how it works: business stock is sold to a trust in exchange for a promissory note. In the case of an installment sale, only the IRS-mandated interest has to be paid back annually. The outstanding principal owed to the trust creator may take place at the end of the term in a balloon payment. The principal remains in the trust longer and, ideally, will produce more growth and income than if the person used a GRAT.

Business owners need to work with their estate planning attorney to ensure that any of these strategies will be coordinated with any other estate planning strategies already in place. For most business owners, a combination of trusts and corporations is designed to achieve the twin goals of protecting assets and minimizing taxes.

Reference: Wealth Management (July 15, 2024) “3 Underutilized Estate Planning Strategies for Business Owners”

Protect Your Elderly Parents from Financial Exploitation in Nursing Homes

A nursing home should take good care of your elderly parents, but occasionally, a poorly managed one will exploit the seniors in their care. Financial exploitation in nursing homes takes many forms, such as unauthorized withdrawals, hidden charges, overbearing financial control, and manipulation by caregivers. According to Nursing Homes Abuse, up to one in six elderly individuals in nursing homes suffered some form of abuse in 2022.

Can You Recognize Financial Exploitation?

Several red flags may indicate your elderly parent is being financially exploited:

  • Unexplained withdrawals or changes in bank accounts
  • New or added names on financial documents
  • Sudden changes in wills or financial documents
  • Missing funds or valuable possessions
  • Substandard care despite an adequate funding source
  • Reports of financial exploitation from the elderly person
  • Signs of fear or anxiety when discussing finances

What Steps Prevent Financial Exploitation?

Regularly reviewing financial documents is crucial in spotting early signs of exploitation. Monitor bank statements, credit card bills, and any changes in financial habits. Setting up alerts for large withdrawals or transfers can also help you stay informed. If possible, pay frequent visits to your parents. This will help you stay current on their living conditions and relationships with caregivers and may deter abusers.

Establishing a power of attorney can be smart, as it will vest a trusted family member or attorney with authority to manage parts of your elderly parent’s finances. However, your parents must understand the decision and choose someone they’re comfortable with.

Informing your parents about common scams and tactics financial abusers use can also help. Encourage them to be cautious about sharing financial information, report suspicious activity immediately, and remember they can contact you for help.

What If You Suspect Financial Exploitation?

If you suspect financial exploitation, start documenting any evidence. Keep a record of suspicious transactions, changes in financial documents, and any unusual behavior or comments from your elderly parents or caregivers. Contact Adult Protective Services (APS) or your local long-term care ombudsman to report suspected financial exploitation.

Another important step is to consult an elder law attorney. Someone with experience in the field can tailor advice to your unique situation, offer insight, and propose solutions. They can help you look into the situation and spot evidence if you suspect elder abuse.

Can Estate Planning Protect Elderly Parents?

Estate planning is not just about distributing assets after death; it’s also about protecting elderly loved ones during their lives. A comprehensive estate plan can establish safeguards to hinder financial exploitation in nursing homes.

An estate planning attorney can help create wills and trusts to protect assets. They can also assist you in establishing powers of attorney and other mechanisms to protect your elderly parents.

Estate Law Can Safeguard Your Elderly Parents

By the time your elderly parents suffer financial exploitation in a nursing home, it’s often impossible to recoup the damages. Be proactive and contact our law firm today to schedule a consultation. Our experienced estate planning attorneys can help you create a plan to detect and limit financial abuse.

Key Takeaways

  • Recognize Signs of Financial Abuse: Early detection can prevent further exploitation.
  • Proactive Monitoring: Regularly review financial statements and documents.
  • Legal Safeguards: Establish powers of attorney, trusts, and advance directives.
  • Stay Involved: Frequent visits and communication with your parents and their caregivers.
  • Report Suspicions Promptly: Engage with nursing home administration, ombudsman programs, and law enforcement when you suspect elder abuse.

Reference: Nursing Homes Abuse (Sep. 13, 2023) “Financial Abuse in Nursing Homes: Warning Signs & What to Do”

Is Your Student Off to College? Make Sure These Legal Documents are Available

Sending your child to college is a major milestone but comes with important legal considerations. Now that they live independently, handling a medical emergency could be much more complicated. The Wall Street Journal makes the case that, as parents, you must ensure your college-bound student has their documents in order. This way, you can help them if they need it in any situation.

Why are Legal Documents Important for College Students?

When your child turns 18, you lose access to their medical, financial, or academic records. You could face significant hurdles in helping them during emergencies without the proper legal documents. There are four essential legal documents.

HIPAA Waiver

A HIPAA waiver allows your child to grant you access to their medical records. Without this form, healthcare providers cannot share any medical information with you due to privacy laws. This waiver ensures that you stay informed about your child’s health and can make informed decisions in a medical emergency.

Medical Power of Attorney

A medical power of attorney designates someone to make medical decisions on your child’s behalf if they cannot. If your child becomes incapacitated due to illness or injury, you’ll need this document to manage their care. Families without a medical power of attorney will have to delegate important healthcare decisions to people they don’t know.

Durable Power of Attorney

With a durable power of attorney, you can manage your child’s financial affairs if they cannot do so. This can include paying bills, handling bank accounts, and managing investments. This document is particularly important if your child is studying abroad or becomes incapacitated.

FERPA Waiver

The Family Educational Rights and Privacy Act (FERPA) protects the privacy of student education records. A FERPA waiver allows your child to grant you access to their academic records. This can be important if you need to stay informed about their academic progress or assist in managing their education.

Why are Legal Documents Needed?

Without these legal documents, you could face significant challenges in assisting your child. For instance, you could be unable to learn about your child’s condition if they become hospitalized. You would also be unable to make decisions on their behalf to manage their care or finances.

How to Obtain Relevant Legal Documents?

Most of these documents can be obtained online for free or through your attorney. Ensuring that the forms meet your state’s legal requirements is essential. Some documents may require notarization. Here’s a brief guide on how to obtain each:

  • HIPAA Waiver: Available online or from your child’s healthcare provider.
  • Medical Power of Attorney: Available online, but ensure it complies with state-specific laws.
  • Durable Power of Attorney: Obtained from an attorney to ensure it meets state legal standards.
  • FERPA Waiver: Available through your child’s college or university.

Do Legal Documents for College Students Vary between States?

The requirements for legal documents for college students can vary by state. If your child is attending college out of state, you may need to prepare valid documents for your home state and the state where your child studies. Consulting with an attorney helps properly prepare and execute all documents.

What If My Child Is Studying Abroad?

A durable power of attorney becomes even more critical if your child studies abroad. This document ensures you can manage their financial matters and make decisions on their behalf if they encounter issues while overseas.

Secure Your Child’s Future Today

Preparing these essential legal documents for college students maintains their safety and your peace of mind. Don’t wait until an emergency arises; take action now.

If you need assistance preparing these legal documents or want to learn more about estate planning for your college-bound student, contact our office today to schedule a consultation. Our experienced attorneys are here to help you navigate these important decisions and ensure your child’s future is protected.

Key Takeaways

  • Access to Medical Information: A HIPAA waiver ensures you can receive updates on your child’s health in emergencies.
  • Medical Decision-Making: A medical power of attorney allows someone to make medical decisions for your child if incapacitated.
  • Financial Management: A durable power of attorney enables you to handle your child’s financial matters if needed.
  • Educational Records Access: A FERPA waiver lets you stay informed about your child’s academic progress.
  • State Compliance: Ensures documents meet specific state requirements, which is crucial if your child attends college out of state.
  • Peace of Mind: Having these documents prepared ensures you can support your child effectively in any situation.

Reference: WSJ (Aug. 14, 2023) “Before Your Child Goes to College, Complete These 6 Important Documents – WSJ”

Am I Obligated to Pay My Deceased Parent’s Medical Debts?

Being responsible for your parent’s medical debt plus your medical expenses is a genuine worry for many Americans. A recent article from U.S. News & World Report starts with an unsettling title: “This Is Why You Might Be Responsible For Paying Your Parents’ Medical Debts.” A total of 25 states currently have “filial responsibility laws,” enacted to give adult children the responsibility to support parents who can’t provide for themselves.

The reality is more nuanced than the headline. Technically, you could be required to pay for some of your parents’ essential needs if they cannot. In Nevada, a law states that if there’s a written agreement to provide care, the child has control over and access to the parent’s assets or income, and the child can financially support the parents.

In most cases, certain triggering events must occur before the children need to pay their bills. For one, the parent must be found to be indigent. If parents receive nursing home care and cannot afford to pay for care until they qualify for Medicaid, the facility could sue the children.

Enforcement now rarely occurs. In Pennsylvania, a statute was proposed to prevent having family members support impoverished family members, including a person’s “child, spouse and parents.”

However, there’s more to the story. Adult children might get phone calls and letters from debt collectors if medical bills are unpaid. If a healthcare provider doesn’t receive payment and sells the debt to a third-party collection agency, the collection agency then owns the debt. It may turn to any viable source—typically, an adult child.

What can you do? Unless you co-signed or agreed to be a guarantor on bills for your parents, you are not liable for the debt. The collection agency will hope you don’t know this and press for payment. They may not be polite about it either. They cannot sue you or add the debt to your credit reports by law. They can be very aggressive. However, you have the law on your side. You don’t have to pay if you’re not legally responsible for the bill.

You’re also protected by the Fair Debt Collection Practices Act (FDCPA), which gives you the right not to talk with third-party debt collectors. Once you tell the person it’s not your debt and to stop contacting you, they are bound by the FDCPA to stop contacting you.

There are steps to prevent any accidental mingling of funds with parents. For starters, don’t co-sign debts, including loans, mortgages and credit cards. Read nursing home contracts thoroughly; some contracts may attempt to sign you up as a responsible party. Don’t sign anything you don’t understand—ask your estate planning attorney to review the contract first.

Plan by ensuring that your parents have wills, trusts and powers of attorney with medical directives. Talk with them about insurance policies and find out if they have created trusts to protect their assets. If they are relatively healthy, see if they are eligible for long-term care insurance.

Put a plan in place for the inevitabilities that occur in life. They may be spry today. However, aging is not always a kind or easy process. If it’s likely they will need your help, and you’re able to do so, build in some emergency funds for their needs. If parents have not put any estate planning into place, including planning for long-term care, talk with your estate planning attorney about how to help them get started.

Reference: U.S. News & World Report (June 28, 2024) “This Is Why You Might Be Responsible For Paying Your Parents’ Medical Debts”

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