Congress has afforded all of us an unprecedented—and probably never to be seen again—opportunity to make significant gifts to our children (and grandchildren), thereby reducing the estate taxes which could hit our families when we die. For the remainder of 2012, each of us is permitted to make gifts totaling up to $5.0 million to our offspring without any federal gift taxes.  That amount will fall to $1.0 million for each of us on January 1, 2013.  On paper, it appears that making significant gifts this year makes sense, if we are concerned that our estates will exceed $1.0 million in 2013 and thereafter.  However, does such a strategy make sense for you and your family?

First, it is important to remember that you must keep enough assets in your name so that you can provide for yourself as you age.  In doing that, remember that a change in your health could dramatically increase your cost of living.  Relying on children to take care of you if you run out of money carries with it great risk.  Some children can barely afford their own living expenses; others simply don’t care about their parents.

Secondly, any gift can also affect your ability to have your nursing home costs paid by the state in which you live if you run out of money.  Ohio has a 5-year “look-back”rule, which provides that you are not eligible for Medicaid (the State funds which pay the nursing home costs for those who run out of money) if you make a gift within five years of applying for Medicaid.  The period of your ineligibility depends upon the size of the gift.  So, while making gifts to reduce your estate may seem like the right thing to do, it could have bad consequences for you if you end up in a nursing home.

The conclusion:  it is really important to get competent advice from an Estate Planning and Elderlaw attorney before beginning any type of gifting strategy.

Jack N. Alpern, Esq.

The Alpern Law Firm

The Alpern Law Firm is a member of the American Academy of Estate Planning Attorneys.

Why is it that when you enter a hospital they always ask if you have a Living Will or Durable Power of Attorney for Health Care?  Those documents, referred to Advance Health Care Directives, give to the health care providers and your loved ones your wishes regarding the termination of life support under the proper circumstances. Those circumstances vary from state to state.  Under Ohio law, they may be executed if two physicians have indicated in writing that you are either (1) terminally ill (going to pass away soon) or (2) permanently unconscious (as in a coma).

The Living Will is self-executing:  if you sign it and the circumstances described above exist, your wishes will be carried out, without anyone else required to act (although the persons you designate will be notified by the providers).  The Power of Attorney for Health Care requires the decisions of both the two physicians plus the individual you select before your wishes may be carried out.  In the event that you have signed both of those documents, the Living Will trumps.

Which of those alternatives is right for you?  This should be carefully discussed with your
estate planning attorney.  However, failure to have either or both of those documents could result in you being kept alive when there is no hope of recovery.

The Alpern Law Firm is a member of the American Academy of Estate Planning Attorneys.

Many parents agonize over which household items (e.g., collections, antiques, family heirlooms, jewelry, etc.) they should leave to certain of their children when the parents pass away.  They spend hours trying to decide what would be an equal distribution of such items.

Here are some important concepts to remember:

1.  “Fair” does not necessarily mean “equal”.  Some children may be more deserving of certain items, in light of their continuing care and devotion to the parents.  Although we parents are seized with the age-old proposition that we must treat our children equally, nowhere in the Old or New Testaments does it say that.  I’ve looked, and it’s not there.  Do your best to be fair, not equal.

2.  Those items may mean more to the parents than they ever will to the children.  How do you know?  Ask them!  Have a frank discussion with your children which might begin with, “When we’re gone, are there any items from our home which would mean a great deal to
you?”  You might just be surprised with the responses you get.

3.  A possible solution to the dilemma is to have the children draw straws at the appropriate time and then choose one item of your belongings, rotating the selection process until no items are left or until no one wants any more of the items.  After that selection process,
they might just agree to swap some items.  In any event, no one should feel that they were treated unfairly with such a system.  It is, however, to define what an “item” is.  Does an item mean a dining room suite or just one piece of that furniture?  This should all be spelled out in your last
will or trust.

Resolving such matters now can reduce or eliminate friction among family members.

The Alpern Law Firm is a member of the American Academy of Estate Planning Attorneys.

Parents often believe that their children will come to an agreement over the division and distribution of the household goods, family memorabilia and personal effects which they have accumulated over the years when the parents are gone.  However, many families find themselves embroiled in arguments over those very items. “Grandma’s pie plate was promised to me!” one family member will argue. “No, Mom always told me that would go to me,” another chimes in.

These situations are preventable with good estate planning.  Some parents will discuss these matters with their children (and grandchildren) before they have an estate plan prepared, and those conversations can be very telling. Parents often tell me that they were astonished at how much the “little stuff” around the house meant to their offspring.  The economic value of the items doesn’t matter as much as the sentimental or emotional attachment to those items, in many cases.

Spelling out specifically what items will pass to which child may ward off such arguments and save the family time, expense and anxiety when the parents are gone.

The Alpern Law Firm is a member of the American Academy of Estate Planning Attorneys.

After a recent speaking engagement where I had been talking  about how to make an inheritance mean something to the inheritors, a man
related a story to me:

Many years ago, he had been a new car salesman.  A man, wife and children came into his dealership and said they HAD to purchase one of the most expensive cars on my lot, since “we just inherited a lot of money.”  We completed the transaction, and they drove off in their new car.

Several months later, they came back and said they HAD to  sell that same car back to me.  I pointed out that I could only offer them considerably less than they had paid for it, since it was now a used car (and in bad condition).  They said they understood, and we completed that transaction.  As they were leaving I said, “Do you mind if I ask why you purchased such an expensive car and then came back so soon to sell it back to me at such a loss?”  The husband explained that after they had spent their entire inheritance, they needed to sell the car so that they could “get back on welfare.”

What a shame!  That same inheritance could have been used for so many positive purposes – to purchase a new, affordable, home, start a small business, get an education to improve the quality of life, etc.  Why does this happen so often?

My conclusion is that the heirs so often squander their inheritance because they were unprepared to receive it.  If we spend more time teaching our children and grandchildren about what it takes to accumulate an estate –hard work, determination, focus—perhaps what they receive from us will actually mean something.  Demonstrating  NOW the true value of wealth, being able to help others less fortunate, can also give meaning and significance to the inheritance our loved ones receive.

Is it time to revisit your estate plan?

The Alpern Law Firm is a member of the American Academy of Estate Planning Attorneys.

The cost of long-term care, particularly skilled nursing care, is devastating to many estates. That cost, averaging $7000 per month in northeast Ohio, can erode or completely eliminate the assets which you have accumulated over a lifetime of work. One of the more devastating aspects of this cost for American families is not leaving enough behind to pay for funeral and burial expenses. Under Ohio law, if you prepay your funeral and burial costs in a manner such that you cannot get the money back, that money is not a “countable resource” for Medicaid qualification purposes.

That means that the money which you have prepaid for funeral and burial costs does not have to be spent down for in order for your family to pay for the cost of a nursing home. That relieves your family from the pressure of having to scramble to find enough money to pay for the final expenses. Paying for a funeral in advance can be accomplished in two ways: first, you can prepay it at a funeral home. Secondly, you can prepay it using a “funeral trust”, thereby setting aside the money in a safe way for the payment of these very necessary expenses.

The bottom line is, paying in advance for funeral and burial—an expense which is inevitable for all of us—is just one more way to give you and your family peace of mind.

The Alpern Law Firm is a member of the American Academy of Estate Planning Attorneys.

We all need to think about prepaying our funerals.

Prepayment insures that those funds will be there for family when the need arises, even if we end up in a nursing home.

The Alpern Law Firm is a member of the American Academy of Estate Planning Attorneys.

We all need to think about end-of-life decisions. I deal with families every week where a loved one has not signed Advanced Health Care Directive documents and now that person is terminally ill. In addition, my physician clients share the agony with families where the wishes of the dying patient have not been expressed in a legally-enforceable manner. This situation just increases the anguish for everyone involved.
Executing a Durable Power of Attorney for Health Care and/or a Living Will are critically important for all of us. Once these documents are signed, our families can rest assured that decisions about whether or not to prolong life and whether or not to continue life support, food and water can be made in a way which is consistent with our wishes. Let’s all get this done!

The Alpern Law Firm is a member of the American Academy of Estate Planning Attorneys.

COMPLIMENTS OF THE ALPERN LAW FIRM

By The American Academy of Estate Planning Attorneys
www.aaepa.com • blog.aaepa.com

You and your spouse have worked hard to save for your golden years. But have you planned for a long, secure retirement if one of you outlives the other? Study after study shows that women tend to fall behind men when it comes to planning for retirement, and there are a great number of reasons for this situation.

During their pre-retirement years, women traditionally have not earned as much as men, and mothers have often curtailed their career plans in order to raise children. This translates into less opportunity to save for retirement needs. Just as significantly, women statistically live longer than men, meaning that retirement tends to last longer for women. Further, women are more likely to need long-term care and other services as they join the ranks of the more substantially elderly.

As a married couple, it’s essential to approach retirement planning with the goal of ensuring that the spouse with greater longevity, usually the wife, is set up to enjoy a secure, worry-free retirement. This goal can be accomplis hed by paying special attention to certain key financial areas.
     •    Social Security. Did you know that when you choose to start receiving Social Security benefits can make quite a difference in your retirement income? Delaying retirement can increase your Social Security benefit by as much as 8% per year. This is especially significant when one spouse was formerly the higher wage earner. If, for example, the husband earned more during his working years, his widow could claim his higher Social Security payment when he passes away instead of relying on her own lower monthly benefit. So, the longer the higher wage earner waits to retire (ideally until age 70), the more retirement income the surviving spouse will have ultimately.
     •      Life Insurance. Life insurance isn’t just for families with young children. If you qualify for a policy, the death benefit can be a lifesaver to your surviving spouse, who will be free to put the funds toward household expenses, medical costs, or reducing debt.

     •      Annuities. If you are considering purchasing an annuity to provide an additional income stream during retirement, you may want to look into one that carries a “joint life” benefit. Under this arrangement, annuity payouts continue as long as either one of you is living.

     •      Long-Term Care Coverage. Women not only tend to outlive their husbands, but their longevity means that they are also more likely to need long-term care at some point during their retirement years. Whether it’s a nursing home, an assisted living facility, or a home health care arrangement, long-term care is expensive. If you qualify, a well-chosen policy of long-term care insurance can help protect your family’s assets and pay for care.

Aside from seeking reliable advice from a qualified professional advisor, perhaps the most effective way to ensure that both you and your spouse have the best possible retirement plan in place is to make planning a joint effort. Both of you should have a good grasp of your family’s finances, and you should work together to make the major decisions that will affect both of your lives during retirement.

About Our Law Firm
The Alpern Law Firm is devoted exclusively to estate planning. We are members of the American Academy of Estate Planning Attorneys and offer guidance and advice to our clients in every area of estate planning. We offer comprehensive and personalized estate planning consultations. For more information, to attend an upcoming FREE seminar, schedule an appointment or obtain a FREE on-line report, please contact us at 1-(800) 307-5544, and ask for extension 115, or visit us online at www.alpernlaw.com.

About the American Academy of Estate Planning Attorneys
This article is taken from one written by the American Academy of Estate Planning Attorneys. The Academy regularly publishes articles on various estate planning topics as a free resource to consumers. These articles are intended as an overview of basic estate planning topics and issues, and not legal advice. We recommend that you consult with a qualified estate planning attorney to review your goals.

The Academy is a national organization dedicated to promoting excellence in estate planning by providing its exclusive membership of attorneys with up-to-date research on estate and tax planning, educational materials, and other important resources to empower them to provide superior estate planning services to families in their communities. The Academy expects members to have at least 36 hours of legal education each year, specifically in estate, tax, probate, and/or elder law subjects. Since 1993, the Academy has been a highly-regarded and sought-after resource for attorneys and consumers alike, and has been recognized by Consumer Reports, Suze Orman in her book, 9 Steps to Financial Freedom and numerous times by Money Magazine.

The Alpern Law Firm is a member of the American Academy of Estate Planning Attorneys.