FROM THE DESK OF:

Attorney Jack Alpern

After practicing estate planning law for 40 years and having dealt with many families after loved ones have passed away, I continue to be stunned by the amount of family conflict which arises about “who gets what”
when it comes to household goods and personal belongings.  Many of us do not realize that the division of so-called little things – jewelry, collections, paintings, pictures, tools – can fracture families when parents pass away.  Arguments often erupt even before the departed loved one is buried. Many times, families never speak to each other
after the dust settles.  How sad!

All of this can be avoided by clearly spelling out in your estate planning documents – wills or trusts – how these specific things should be disposed of.  The expression “fair does not necessarily mean equal” often comes to mind for me in advising clients how these items should be divided.  Can’t decide who should get what?  Well, one solution is to let the children draw straws to see who gets to select an item first, followed by a selection of one item at a time by each person.  It is important to remember that you must define an “item”; that is, does an item mean just one piece or does it apply to a set of pieces (for example, a dining room table and chairs)?  Another way to handle the situation is to
hold an auction among family members, with each person bidding, and the highest bidder wins.

In any event, it is also important to spell out in your will or trust whether or not the value of the item selected by an heir gets subtracted from his or her share.

When it comes to disposing of personal possessions at death, the worst thing we can do…is nothing!

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.

Trusts have been touted as the ideal solution for Ohio  residents looking for estate planning tools to protect assets from the catastrophic costs of long term care – but can a living trust actually protect assets under Medicaid law?

First, to review how a living trust works:

• A living trust is a legal arrangement in which a person, called the grantor, shifts ownership of property, such as stock, a home, real estate or bank accounts, from their ownership into the legal ownership of the trust. 
• The grantor must actually change the title of ownership of each asset that will be placed in the trust from his or her name to ownership by the trust, which is known as funding the trust.
• A trustee manages the trust’s assets according to the terms of the trust agreement. The trustee can be the grantor, a friend or family member or a corporate entity (such as a bank, a trust attorney or trust company). As the initial trustee, the grantor can maintain full control of the trust until his or her death or incapacity. When the grantor relinquishes the trustee role, a successor trustee takes over the trustee duties. The successor trustee has legal responsibility for administering the trust solely for its named beneficiaries.

Online advertisements and aggressive sales pitches have sometimes used unscrupulous tactics to sell living trusts, even claiming that if individuals transfer property to a living trust, their assets are protected from nursing home costs.

This claim is false.  A living trust is a revocable trust, so it can be changed, revoked or modified at any time by the grantor.  This means that both the income and the property owned in the trust are considered available to cover nursing home expenses under Medicaid law.

A Medicaid attorney can best advise you on the Medicaid planning tools that can be used to meet your needs and goals, it is best not to rely on the advertisements and sales pitches.

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.

Estate planning is an ongoing process – when life changes, so should your plan.  Many believe that once estate planning documents, such as a will, living trust or a durable power of attorney, are executed, their estate plan is complete.  This is not the case – in fact, there are several mistakes that people tend to make in estate planning:

1.         Failing to keep documents up to date.

Changes such as marriage, divorce or the death of a spouse, beneficiary or executor should trigger a review of your estate planning documents.  All too often, spouses name each other in their documents, and when a spouse is lost, during the survivor’s period of grief, the documents are not updated.

2.         Failing to properly use gifting strategies.

Making lifetime gifts can be a powerful estate planning tool – but it must be done properly and as part of a comprehensive estate plan.  In addition to the tax advantages of gifting, you must consider other related isslues, such as whether or not gifting will affect your ability to have the State of Ohio pay for your nursing home expenses after you make gifts.

3.         Failing to update beneficiary designations.

Your retirement plan, life insurance policy and more have beneficiary designation forms.  It is important to not only keep the primary beneficiaries updated, but you should have secondary or contingent beneficiaries named in the event that the primary beneficiary has died.  Since these forms were often completed years prior when an account opened or a policy purchased, it’s an easy task to overlook.

4.         Failing to plan for the expense of nursing homes or long term care.

With nursing home expenses in Ohio now topping $70,000 annually, it is essential to address these costs sooner rather than later.  Not only is there long-term care insurance to consider, but Medicaid planning can help preserve family assets while qualifying for this needs-based benefit.

5.         Not working with an expert.

All too often, people rely on second-hand advice to address their estate planning needs.  You should have expert advice based on your specific needs, and a meeting with an estate planning attorney can save you and your heirs time, money and heartache in the future.

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

Divorce and separation are becoming all too common in today’s society.  With the emotional, not to mention the financial, aspects becoming the focus, many people facing the breakup of a marriage tend to overlook another important issue, the estate planning aspect.

Often as part of estate planning, a husband and wife will execute either a durable power of attorney or a general power of attorney in which they will name each other as an attorney in fact or an agent. Normally, these powers of attorney grant the other spouse control over the assets of the individual granting the power.

If a husband gives a wife a general power of attorney, the wife can use this power to close or make withdrawals from the husband’s individual bank accounts, brokerage accounts and other assets. With emotions running high when a separation or divorce is looming, this is not a good situation.

To revoke a power of attorney, you must locate all of the original documents and destroy them and/or notify the agent that the power is revoked. Notifying the spouse that his power of attorney is revoked will do little good if the spouse is bent on taking your assets.

To address this, you should give written notice to all the institutions which hold your assets to inform them that the power of attorney has been revoked. If the issue of a spouse improperly using a power of attorney is exposed during the divorce, certainly a Court would try to remedy the situation, but if the money is gone, it’s gone, there may be no remedy in some cases.

If you are facing the breakup of a relationship in which you have legal documents executed naming someone as an executor, an agent or proxy, consult with an estate planning attorney to make sure you address the impact on your estate planning documents.

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

The 7th annual Retirement Plan Survey found that 30% of employers are planning to reinstate previously eliminated or reduced matching contributions in 2011.  But the bad news – over 40% of those responding to this survey did not have plans to reinstate the eliminated or reduced company matches.

This news makes retirement planning and estate planning that much more important.  Gone are the days of company pensions and with people living longing, planning for later years must be done sooner, rather than later, in order to achieve your goals.

Even during an economic downturn, saving for retirement is still important.  Worried about the market?  Nine in 10 of the popular retirement plans are at least back to where they were in October 2007, the peak of the stock market. Many investors who kept their nerve and continued putting some of their paycheck into a 401(k) during the market’s worst months are now ahead.  Don’t let the economy be your excuse.

Just like estate planning, retirement planning is an ongoing process.  If your ‘nest egg’ took a hit and has not yet recovered, you need to reevaluate and regroup.  Don’t ignore it, don’t simply stop contributing.

These days estate planning is not just about planning for your death, it has come to mean planning for life as well, and retirement plans need to coordinate with your estate plan to provide a comprehensive plan for later years.  Working with an estate planning attorney allows you to put together a plan to meet your specific goals and needs, and to get the guidance you need for your plans during difficult times.

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

It seems to be practical – opening a bank account as “joint tenants with rights of survivorship” with a spouse – but did you know that holding a joint account impacts your family when you pass away?  The ‘ownership’ of the account determines what happens to the account upon the death of one owner.

For example:  If a husband has a credit card solely in his name and passes away, the account is settled during probate, which is the legal process that administers an estate.  The debt is either paid off, or in the case where an estate does not have enough money to pay all of the bills, is not paid in full, but normally the credit card company could not then go after family members for the debt.

On the other hand, if that credit card account was a joint account with both the husband and wife listed, the bills could then become the responsibility of the wife should the husband pass away.  This is not only the case for the ‘debt’ accounts, such as credit cards and loans, but the ‘asset’ accounts, such as stocks, savings accounts and more.  In that case, joint ownership can be a helpful estate planning tool to allow these accounts to avoid probate.

It’s important to realize that how your accounts are set up, even how your home is owned, impacts your future and your family’s future when you pass away.  Working with an estate attorney will give you and your family an overview of how well you’re prepared for the host of issues you will face if one of you dies suddenly. Debt is only one piece of that puzzle.

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

If you have a cause or organization that is important to you, make sure you mention this to your estate planning lawyer during your first meeting.  It may be a win/win to leave  a charitable bequest in your will or trust to a non-profit. 

There are several estate planning tools that can be used, including:

1.         Will Bequests

Leaving an outright gift to a nonprofit or charitable organization as a bequest in a will is one of the simpler estate planning techniques, and may be appropriate for modest gifts. 

2.         Charitable Remainder Trusts

Normally a charitable remainder trust is used for highly appreciated assets, such as stocks, as it can eliminate immediate recognition of  capital gains on the sale of those assets.  The assets are placed in a trust to earn annual income for you during your lifetime, and you can access the income as needed. When you die,  the remaining funds are paid to the charity.  You also qualify for an income tax deduction when the trust is created. Finally, you will have removed the assets transferred into the charitable trust from your taxable estate at death.

3.         Charitable Gift Annuities

Gift annuities are typically backed by the charities themselves and they allow you to make a tax-deductible contribution.  In exchange, you receive regular payments for the rest of your life. Ideally, about half of the initial gift remains with the charity when you die. 

But the economic downturn could cause some charities to have trouble meeting their annuity obligations. Some have seen the reserve funds they use to ensure payouts shrink, prompting them to turn to insurance companies to back up their obligations.  In a worst case scenario, if a charity goes bankrupt, creditors ahead of you in line could have a claim on assets intended to fund your payments.  Since the gift is irrevocable, you cannot get your money back if the charity runs into trouble.

If leaving a legacy of giving is one of your estate planning goals, work with an estate planning attorney to make sure it is a truly a win/win situation.

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

Etta James is best known for her classic At Last, but now at just 72 years old she is making news with the sad story of her family’s fight to control her money and her care.  Ms. James is suffering from Alzheimer’s disease with dementia and also has leukemia.  According to her doctor,  Ms. James can no longer perform any of the activities of daily living, such as eating, bathing or dressing.

To make matters worse, her mental incapacity has sparked a family fight that has led to a lawsuit.  Her husband of 41 years filed a court proceeding to take control of nearly one million dollars of bank accounts in her name.  He claims the money would be used to pay for her care and keep her at home, rather than in a nursing home. 

Etta James had a Durable Power of Attorney naming her son (from a previous relationship) as her attorney in fact in 2008, which granted her son the power to make her legal decisions in the event of her incapacity. Normally, this would trump her husband’s claim, but he claims that Etta was not mentally competent when this document was signed;  therefore, it should be declared invalid. 

The son claims that he, like the husband, wants Etta’s money to be used for her care and to keep her at home, rather than in a long-term care facility.  But the son wants someone independent to manage the money instead of Etta’s husband. 

Etta James is a resident of California, which is a community-property state, so the husband’s lawyer has filed asked for Etta’s money to be declared community property and to permit him to move the cash to a joint account with his name on it.

In February, 2011, a California judge froze the assets of Ms. James, authorizing a $30,000 withdrawal from Etta James’ accounts to cover her medical needs and ordered a medical evaluation to determine whether she is receiving the appropriate treatment. 

All of this could have been avoided if Ms. James’ documents had been updated. This sad case illustrates the need to have estate planning documents and incapacity planning completed well before the need arises.   Work with an estate planning attorney to make sure you have the documents you need to not only distribute your assets upon your passing, but to address situations that can come up later in life.

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