Without a plan, long-term medical problems can have a devastating impact on family members' physical, emotional and financial well being. Although the impact can be prevented with proper long-term care planning, it can easily and quickly be magnified without a plan. Long-term care insurance is one option that can help fund a long term care plan.
]]> Even for people who don't have a plan, but who can afford to pay for unexpected medical care, their other financial commitments and goals must often fall to the wayside.Men are more likely to fail to consider the possibility of unexpected future medical problems or assisted living needs. Men may not be motivated by risk -- something happening to them -- but they are motivated by consequences -- something happening to their loved ones. Explaining to them how their family members and other loved ones could be harmed by their failure to create a plan, therefore, is a great way to motivate them to plan for the unexpected.
There are several other reasons why planning ahead of time for long-term care is a wise decision. For example, people who must sell assets to pay for unexpected medical problems might be forced to sell investments in a down market or pay exorbitant taxes. These consequences, like the others discussed earlier, can be mitigated or avoided with a plan.
Those who think that Medicaid or Medicare will cover the cost of unexpected medical problems are often disappointed to learn that these programs have several limitations. For example, although Medicaid provides custodial care the recipient must meet strict financial qualifications and Medicare doesn't pay for custodial care at all.
Source: Investment News, "Advisers shortsighted about long-term care," Darla Mercado, May 6, 2012
]]>Gabor's husband and caretaker, however, opposes the request. He and Gabor have been married for 25 years and he says that he has been "providing the best possible care" for Gabor thanks to their estate planning, but her expenses are beginning to exceed her income. As a result, he says he must sell Gabor's mansion.
]]> However, one of Gabor's doctors stated in a court document that Gabor's comfort and health could be negatively impacted if she is taken out of her familiar environment. The doctor said the actress is aware of where she is and is "calm and well cared for."According to Gabor's daughter, her mother's husband has mismanaged her mother's finances for several years. In addition, she claims that her mother is being treated improperly. Gabor's husband, however, says that Gabor's daughter is the one who is responsible for the financial mismanagement of her mother's assets, not him.
The parties recently informed a probate judge that they wish to avoid a court battle and will attempt to resolve their dispute in mediation. The mediator they will use is a retired probate judge.
In Virginia, there are two ways in which a family member can be granted the power to make financial or medical decisions on behalf of another family member. The first is through a power of attorney, which the granting family member must prepare in sound mind. The second is through a guardianship, which does not require the granting family member to be competent.
Mediation, which is a former of alternative dispute resolution, can eliminate several complicating factors that naturally arise from judicial involvement in a private dispute. Depending on the needs of the parties involved, it may be the most appropriate method of dispute resolution.
Source: The Washington Post, "Attorneys tell judge they are trying to settle case over Zsa Zsa Gabor's care, finances," May 2, 2012
]]>One common mistake is the failure to create a will. Without a will, assets are distributed in accordance with state law. This can result in unintended allocations. In general terms, a will provides the opportunity to decide who gets what and when a person's assets are distributed.
]]> In addition, there has been a recent increase in the use of websites to create estate planning documents. However, these one-size fits-all documents often fail to take into account the unique facts and circumstances of their purchasers. What's more, because Virginia law contains several nuanced requirements, these computer-generated documents might end up being invalid.Another common mistake is the failure to consider how life insurance proceeds can affect estate taxes. If an insured person owns their his or her insurance proceeds at death, the proceeds become part of the estate and are, therefore, taxable. However, an insured person can transfer the ownership of the life insurance proceeds before death through a trust, for example, thereby minimizing estate tax liability.
Yet another common pitfall is not taking advantage of the several available gift exclusions provided in the Tax Code. Giving gifts frequently can be an effective and fulfilling way to decrease future estate tax liability. This is especially true in 2012, given that the federal estate tax exemption for gifts is at its highest ever, up to $5,120,000 per person in a lifetime.
Although it is never too late to create an estate plan, it is important to start planning as soon as possible. An estate plan can benefit anyone because it provides the opportunity to plan healthcare wishes and create financial plans for a number of different situations.
Source: Forbes, "7 Major Errors In Estate Planning," Rob Clarfeld, April 25, 2012
]]>The boy's parents allegedly took the money from their son's trust account after he passed away in 2008. As a result of their actions, the boy's parents face charges for grand larceny.
]]> The trust was funded from a multi-million dollar judgment against the hospital where the boy was born. The purpose of the trust was to pay for the boy's increased living expenses due to the disabilities sustained during his delivery. In legal terms, the boy was considered a "beneficiary" of the trust.According to the charges against the parents, after the boy died the city was supposed to be repaid for Medicaid costs with the remaining trust balance. However, the boy's parents took more than half of the trust's original $2 million balance before the city could obtain its share.
Several different types of trusts exist, including special needs trusts. The purpose of such trusts is to make sure that an individual who has a physical or mental disability obtains money that has been set aside for their benefit. In this case, a court order mandated the use of trust. In other cases, family members voluntarily set up trusts for the benefit of a child.
Special needs trusts are not only helpful for disabled children, but can also benefit elders and disabled adults who do not have the mental capacity to appropriately handle their financial assets. Northern Virginia residents who think that they might have a need to set up a trust should contact an attorney who has expertise in this area of law. Trusts can be very helpful tools, but misusing them can result in severe consequences.
Source: The Wall Street Journal, "NYC DA: Parents stole from disabled son's trust," Associated Press, April 17, 2012
]]>The North American Securities Administrators Association reports that in 2009, authorities issued more than 500 state securities enforcement actions that involved investments sold to the elderly. In 2010, that number more than doubled to over 1,200. State regulators think expect that number to continue to increase.
]]> Scammers target the elderly via financial schemes such as investments promising extraordinary returns. According to experts, the elderly often have more savings than other demographic groups, and might suffer from mental or physical disabilities, making them more vulnerable.Scam artists are not the only ones facing criminal complaints and cease-and-desist orders as a result of securities enforcement actions. Similar actions are being brought against companies that sell legitimate investment products to people, including the elderly, who are not ideal candidates for the products. One example is annuities with high surrender penalties if the investments are cashed out earlier than expected. Such investments are not suitable for many elderly people.
Financial scams resulted in a loss of nearly $3 billion for the elderly in 2010. One way to assist the elderly in avoiding such scams is to encourage them to sign up for the National Do Not Call Registry. Other options include setting up a guardianship, which gives a competent adult legal authority to act on behalf of their elder family member.
Source: The Wall Street Journal, "Financial Scammers Prey on Seniors," Anne Tergesen, April 7, 2012
]]>Eligibility for Medicaid is based on a combination of financial and non-financial requirements. States set their own income and asset eligibility criteria for Medicaid and eligibility is primarily for people falling into particular categories, such as the poor and elderly. In 2011, 82,885 elderly persons participated in Virginia's Medicaid program, many as part of their estate planning.
]]> Recovering long-term care costs from the estates of deceased Medicaid recipients is one way that cash-strapped states are looking to reduce the total cost of Medicaid for the state. Other proposals include eliminating or making cuts to certain programs.Elderly people planning to enroll in Medicaid programs can plan ahead so that their long-term care is covered and their children aren't left with unexpected and expensive bills. Some options they may consider are transferring certain assets to their children or creating a trust prior to enrolling in Medicaid. Another option could be obtaining long-term care insurance that could cover long-term care before Medicaid coverage begins.
Unfortunately, people are often surprised with unexpected bills or financial obligations when their loved ones pass away. That is why it is essential to plan ahead for the unexpected. An attorney experienced in estate and long-term care planning can help families determine the best plan to protect their assets in the future.
Source: The Wall Street Journal, "Medicaid Gets Harder to Tap," Kelly Grene, March 30, 2012
]]>Parks' 15 nieces and nephews had asked the court to require the co-personal representatives of the estate to post an $8 million surety bond in order to ensure that the nieces and nephews would receive a fair amount of financial compensation through any sale of Parks' belongings.
]]> The parties previously agreed that 80 percent of the proceeds would go to the Rosa and Raymond Parks Institute for Self Development and her relatives would receive the other 20 percent. However, the auction house now reports that Parks' belongings will only sell for around $4 million because the auctioneers cannot find a buyer. Previous estimates had the items' worth pegged between $8 million and $10 million. The various factions in the dispute want to sell the entire collection to a single institution that can care for all the memorabilia.Regardless of price, no item can be sold without the approval of the relatives' lawyer, Parks' personal assistant and a court representative. The lawyer representing Parks' family said that the heirs are worried their interests are not going to be fairly recognized.
Sadly, Parks' interests for her estate do not seem to be clear or protected. Usually, appointing a trusted executor of an estate will avoid needless expenses and make property distribution much easier. Unfortunately, a judge now largely controls Parks' estate.
Source: Detroit Free Press, "Judge tells Rosa Parks' estate disputers nothing sells without his OK," David Ashenfelter, March 21, 2012
]]>Often, a trust will also specify a successor trustee, which ensures that the grantor's assets will continue to be managed in the event the grantor becomes unable to manage his or her financial affairs. In many cases, a successor trustee is a spouse, child or other trusted family member of the grantor.
]]> In addition, trusts are valuable because they allow a grantor of assets to exert control over how their funds will be used even after their death. For example, a trust can be created to fund only educational expenses, for example. The beneficiary of the trust will be prevented from using the grantor's assets for any other purpose.Furthermore, a trust can provide asset protection when a grantor has beneficiaries who have special needs or who may be prone to financial mismanagement. A trust is different from a lump sum gift, because the trust's assets can only be used for specific purposes outlined by the grantor.
There are a number of different types of trusts, though all trusts have a few things in common. They don't go through probate, they can be set up to reduce tax consequences, they allow the grantor to have more control over the disposition of their assets and they can accomplish goals that a will alone cannot address.
Source: Seacoastonline.com, "Money Talk: Trusts are not just for the wealthy," David T. Mayes, March 11, 2012
]]>The children in this instance could have tried to contact their mother's doctor to discuss her condition. In some cases, a doctor is able to talk to a family member about a person's condition even without a legal release, especially if the person is suspected of having dementia. However, many doctors will not be so willing to release doctor-client information, requiring the person to have legal documents created during estate planning that would permit access.
]]> The children also could have planned ahead of time and obtained important legal documents. The first is a trust, which allows a family member or friend to manage a person's assets. The second is called a durable power of attorney for finances. It gives someone the power to make financial decisions for another person. Both the trust and durable power of attorney options are available to residents in the state of Virginia.Making decisions about someone's medical care requires a separate durable power of attorney for health. The last document needed is an advance healthcare directive which allows someone to specify their wishes so they can maintain control over their future treatment options. An advance healthcare directive may also designate a person to communicate those wishes for them if they are unable to do so.
Source: Los Angeles Times, "Health 411: Aging mom may have dementia, and family doesn't know what to do," Lisa Zamosky, March 13, 2012
]]>One change in the tax code has to do with giving gifts. Under the unified gift tax, which returned in 2011, taxpayers can give away $5 million during their lifetime without having to pay the standard 35 percent gift tax. As of 2012, taxpayers can give away as much as $13,000 to as many people as they wish without any tax implications assessed to them or to the gift recipients. According to the IRS, "Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return," is considered a gift.
]]> Another change has to do with the amount covered by the estate tax exclusion. The estate tax is a tax on one's right to transfer property at their death and is measured by the fair market value of assets at the time of death. The current estate tax exclusion is $5 million, and any estate worth more than that amount is taxed at a higher rate. If Congress does not act to keep the current rules in place, the $5 million estate tax exclusion will fall to $1 million in 2012, and an estate worth more than that will be taxed at 55 percent. For estates affected, there may be alternative ways to reduce federal tax liability.Taxpayers who fail to create an estate plan can face serious consequences, which may include the government receiving more taxes than are necessary. By planning ahead of time, taxpayers can preserve their wealth, even after their death, so that as much as possible of their estates can pass to loved ones.
Source: Fox Business, "Twelve Tempting Tax Tips to Save Money for 2012," Kay Bell, March 5, 2012
]]>According to a report issued by MetLife Mature Market Institute, wrongdoers commonly use deceit, threats and emotional manipulation to take advantage of their elderly victims. In 2011, victims of elder financial abuse lost a combined total of at least $2.9 billion, the report said. This staggering number is due in part to the fact that it can be hard for others to notice the signs of elder financial exploitation. While a concerned person might be able to view account statements of the person who is being exploited, but that can be tricky. But it is important: careful estate planning that has been done might be undone by just one unscrupulous person.
]]> The lecture emphasized the importance of elderly people setting up contingency plans relying on someone they trust. This could be in the form of a power of attorney or guardianship. These are two ways in which a court can grant individuals the power to make financial decisions on behalf of elderly people who trust them.In states like Virginia with high senior populations, financial exploitation of the elderly has reached unprecedented levels. Nationwide, 70 percent of those engaged in financial exploitation schemes are family members of the elderly victim.
Source: TheLedger.com, "FSC Lecture Series Aims to Protect Elderly," Elvina Nawaguna, Feb. 24, 2012
]]>Many tributes to Whitney Houston have poured out after her death. However, many of the same tributes couldn't help but mention the singer's troubles with drugs and wondered if her estate was in order at the time of her premature death.
]]> Houston left behind an 18-year-old daughter who was said to be the sole beneficiary of her mother's estate. It was not clear if the young woman was to inherit the money as a lump sum or via a trust or multiple trusts. It may be prudent for parents to consider, when drawing up their own estate planning, if they would want their own children to inherit their estate all at once or over time, in parts.The singer's estate is expected to grow in the near future as interest in her existing music holds the public's attention. She also had completed filming a movie due to be released later this year that should also provide a surge of interest and pad her estate.
Many celebrities fail to take an active role with their own estate planning, perhaps because they are accustomed to having people handle such issues for them. However, most people in Virginia and around the United States owe it to themselves to follow up on their estate planning endeavors and complete them while they are still able.
Source: InvestmentNews, "Whitney Houston: Estate planning lesson in a sad, untimely death," Liz Skinner, Feb. 19, 2012
]]>One of the biggest points to remember about taking IRA distributions is that there are required minimum distributions required once a person is six months past his or her 70th birthday. The penalty for not taking enough out is substantial: a 50 percent penalty on the amount that is under-distributed.
]]> Another mistake people often make occurs when money is inherited by a beneficiary. While the temptation may be great to take all the money in cash up front, it is often better to spread out the distributions over several years, both to ease the potential tax burden and to create a stream of income for the beneficiary.While the allure of higher interest rates or a can't-miss investment opportunity might be tough to pass up, people have to be careful about how they transfer their assets. If they do it themselves, by taking a distribution from one plan and then rolling it back into another, they must complete it within 60 days of the distribution or risk 20 percent mandatory withholding.
Additionally, this maneuver can only be done once a year. However, having money sent via direct transfer, from one investment company to another, carries no withholding, no limits and is a much more hands-off procedure for a casual investor who is looking for a better return.
Source: MarketWatch, "Tax mistakes that can wreck your retirement," Andrea Coombes, Feb. 21, 2012
]]>Though the man died in 2008, the fight over his estate is still brewing. His widow brought a suit in federal court in Washington, D.C., in an attempt to recoup billions of dollars that she claimed should go to her. The couple were married for 72 years but had no children. However, the late billionaire, who was among the 200 wealthiest people in the world, had nine children with two other women to whom he was not married.
]]> To complicate matters, the billionaire left no will. The widow then accused the mother of the man's youngest children, known as the man's "third family," of diverting money that was rightfully hers into trusts in the United States and elsewhere. Members of the man's "second family," who were cordial with the man's legal wife, also accused the third family of taking money that wasn't entitled to them -- but because they felt at least some of it should have gone to the second family. Ultimately, the widow was not successful with her case, but she might be back to try again.It seems likely that much of the drama over the estate could have been avoided with careful and thoughtful estate planning. People in Virginia who are considering their financial future owe it to themselves to come up with a comprehensive strategy for their estate planning.
Source: Legal Times, "D.C. Judge Dismisses Lawsuit Over Estate of Late Taiwanese Billionaire Y.C. Wang," Zoe Tillman, Jan. 30, 2012
]]>Harbor's Edge is a nonprofit retirement community in Norfolk, Virginia. Residents reside in one of three distinct areas: the independent-living units, which are in a high-rise building; assisted-living apartments; or the nursing unit. Until recently, the main dining room, which features a sweeping view of the Elizabeth River, was open to any of the residents at the facility.
]]> However, Harbor's Edge decided last spring to restrict use of the main dining room to those who lived in the independent-living apartments. Those who resided in the nursing unit or the assisted-living wing at the facility had to use dining rooms specified for their particular areas.This put an end not only to people outside the independent-living area using the main dining room, called the River Terrace, but also prevented them from hosting their families and friends there. In some cases, friends who lived in different parts of the facility were left unable to dine together. It even split up a few married couples who required different levels of care. Some of the residents are now considering a lawsuit.
While not every aspect of retirement can be controlled, careful planning can ward off a lot of surprises. Many people in Virginia would benefit from discussing their plans for retirement with an experienced estate planning attorney.
Source: The New York Times, "Tables Reserved for the Healthiest," Paula Span, Feb. 9, 2012
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