Posts By: Gene Osofsky

It’s flu season again, and the strain going around this year has been a difficult one, mainly because of how long it keeps its victims out of commission.  So the article we recently found on Time.com about Long-Term Care seems particularly timely and relevant, if only because this year’s flu could be seen as an omen of what’s to come as Baby Boomers age into their golden years.

According to the article, “A huge wave of baby boomers may need long-term care in their golden years — and yet fewer than half have taken steps to prepare for it… two-thirds of Americans believe it’s important to plan for long-term care, but only 44% have taken steps to protect themselves.”  Part of the reason for this lack of preparedness is that Baby Boomers underestimate the likelihood that they’ll need long-term care, or they overestimate the likelihood that their children or families will be able (or willing) to provide that care.

But there’s another reason why Baby Boomers are statistically unprepared for the crisis of old age; to put it simply, there aren’t any clear avenues to solid and reliable financial preparedness.  “While it’s clear that not enough people are thinking about preparing for their long-term-care needs, it’s not at all clear what, if any, the best solutions are.”

Some think that extra savings in the bank will cover the cost of long-term care; others believe that government programs such as Medi-Cal or Medicare will take care of them.  Unfortunately, both of these beliefs are mistaken. “The average cost of a nursing home ranges from $85,000 to $120,000 a year, while hiring an aide to spend six hours a day on average in the home starts around $40,000 a year… Medicare, meanwhile, only covers up to 100 days of long-term care and often involves co-payments. Medicaid [Medi-Cal in California]will cover long-term nursing-home care but only after the person has drained his or her savings account.”

Another solution is long-term care insurance; but even with long-term care insurance, nothing is clear cut, and too many people have found themselves paying into a policy and ending up with no return on their investment. You also need to be healthy enough to qualify for the policy.  Long-term care insurance is still one of the best options out there, but “There have been horror stories of people paying premiums on long-term-care insurance policies for years, only to find the benefits won’t cover their needs 20 or 30 years down the road when health care and long-term-care costs are significantly higher.”

Another option may be Medi-Cal for those who need nursing level care.  Our firm has been a leader in assisting clients with qualification,  and with helping them plan their estates to enable qualification when need later arises.  There are many myths associated with Medi-Cal. For more information, we invite you to download a free copy of our “Consumer’s Guide To Medi-Cal Planning“.

The best advice we can give is to do your research and ask for the help of an advisor with experience in elder law, elder care, and senior financial planning.  Be prepared.



Posts By: Gene Osofsky

We all know from the many news stories of last  year that estate tax laws are not set in stone, they can fluctuate and change both at the state and the federal level; and as this article in Forbes points out, keeping up with those fluctuations can be of the utmost importance to you and your loved ones.

The many celebrity news stories we saw last year provide all the examples we need of what can happen when you plan well (as was the case with Brittany Murphy’s estate plan) or when you neglect your estate plan—or even worse, when you fail to plan at all. Here are some celebrity examples of common estate planning pitfalls and mistakes:

Failing to update your estate plan. We tell all of our clients how important it is to review and update your estate plan every 2 to 5 years; Gary Coleman provides a prime example of what can happen if you neglect to follow through on those updates and reviews. “[Coleman] created a handwritten codicil to his will in 2007 leaving much of his estate to his wife, Shannon Price. After they divorced, however, Coleman never updated his will or created a new one. That led to a court fight after he died about whether Coleman was still married to Price. Even though they never officially tied the knot for a second time, Price claimed they had a ‘common-law marriage,’ which would mean that the handwritten will would be valid.”

Failing to fund your estate plan. A revocable living trust is a wonderful tool, but it’s just an empty vessel until you fund it by re-titling your assets in the name of your trust.  Michael Jackson created what is most likely a wonderful living trust, but his failure to fund it properly means that 2010 saw “The estate of Michael Jackson… dragged on with no end in sight.”

Waiting too long to create your plan. If you are a senior citizen, waiting too long to create your plan leaves you open to the exploitation or undue influence of acquaintances or family members who might try to take advantage of you.  Even if nothing of the sort has taken place, just the suspicion of undue influence can land your estate in a lengthy court battle. “Does the Anna Nicole Smith case come to mind? The United States Supreme Court ruled in 2010 that it will hear her case for the second time. Did she wrongly take advantage of her 90-year old husband, or did his son use fraud and other improper means to stop the billionaire from leaving money to Anna Nicole?”

We can all benefit from the very public airings of these celebrity estates.  We stand ready to help you avoid the mistakes listed here, plus many more.  The new laws of 2011 provide the perfect opportunity to create a plan (or update your existing plan), and ensure that your family will be well protected now, and in the future.

Posts By: Gene Osofsky

As estate planning attorneys we help our clients plan ahead. We help them create the documents and take the legal action they need to protect themselves and those they love. We help them talk through painful possibilities, and support them as they make difficult decisions.  We work to ensure that our clients and their families will be prepared for any eventuality—but deep down we hope that they will never really need to rely upon some of the documents we prepare in order to “trump” familiy consensus and reasonable decisions.

One of the situations that estate planners (or any compassionate advisor) dread is the family conflict that is happening right now in Minnesota. According to the Minneapolis Star Tribune the family and friends of 85 year old Al Barnes are struggling to make a difficult decision about his end-of-life care—a decision made no easier by the fact that not all family members (or Mr. Barnes doctors and health care providers) can agree on the next course of action.

“Numerous doctors have assessed Barnes in the past year, and agree on his prognosis. According to court records, Barnes suffers from a level of dementia so profound that doctors believe it is pointless to treat his kidney failure and respiratory failure.”  But this isn’t the whole story.  Al Barnes’ wife Lana Barnes believes that “her husband suffers from chronic Lyme disease, and that antibiotic treatment of the tick-borne bacterial infection would reverse his dementia — and necessitate treatment for his other conditions as well.”

Mr. Barnes does have a Health Care Directive which lists his wife Lana as his agent, but it apparently goes no further than that, giving no specific instructions or information about what his wishes for end-of-life care would be.  And herein lies the dispute. “A Methodist Hospital doctor wants to take decisionmaking rights from [Mrs. Barnes] because he believes she is demanding hopeless and painful treatments. The 56-year-old wife is accusing the doctor and others of misdiagnosis that has left Barnes substantially — but not irreversibly — incapacitated.”

The Minneapolis Probate Courts temporarily took away Mrs. Barnes’ authority over her husband’s care earlier this month after the disagreements between wife and doctors came to a head.  “Lana and doctors from Methodist Hospital [are] due to resume arguments over his medical care Wednesday in Hennepin County Probate Court… After Wednesday’s hearing, a judge will decide whether Lana Barnes remains in charge.”

This is exactly the kind of situation we hope to help our clients avoid by encouraging a little bit of forethought, conversations between family members and loved ones, and by preparing a thorough, decisive, and well-thought-out health care directive.

Posts By: Gene Osofsky

One of the best parts about doing the work that our firm does is that we get to help people evaluate their priorities and define for themselves what is truly important.  Sometimes it’s too easy to get caught up in the day-to-day stresses and activities and to lose sight of what your true focus is. In the concerns of the ordinary it’s easy to forget to pay attention to the extraordinary.

It may not sound appealing, but planning for your death makes you take a look at life from a very different point of view.  Take the typical To-Do list, for example. Most people have a To-Do list filled with tasks such as “pay the bills” or “wash the car”, but don’t these lists evoke a feeling of heavy obligation rather than pleasant anticipation? If you were to take your list of Things to Do and add onto the end of it “Before I Die”, how would that change your list? Recall the recent movie, “The Bucket List” and the fun that Jack Nicholson and Morgan Freeman had together in what each thought was the last weeks of their lives.

This is a large part of what estate planning is all about.  It’s about separating the wheat from the chaff, about evaluating your life, realizing what is truly important, and planning to accomplish and protect those things of value.

Of course, nobody can live every minute in this state of heightened awareness. The bills do need to be paid and the car does need to be washed.  But as you make that list of ordinary To-Do’s each morning try to include one thing that brings you closer to your extraordinary goal. Keeping the big picture in mind can give you perspective, and keep you focused on what’s really important. Make your own “To Do” list one that will bring you a sense of pleasant anticipation at the dawn of each day, and of peace and contentment when you turn the final page.

Posts By: Gene Osofsky

We’d like to share with our readers a recent article in Forbes entitled How To Write Your First Estate Plan.  This article supports something we’ve been saying in our blog all along: That everyone needs a will—whether you’re a young couple just starting out, an established family with valuable assets to protect, or an entrepreneurial business owner with succession on your mind. The article reminds us that a will “is the cornerstone of an [estate] plan,” and at whatever stage of life you may be is not too early to make your first will.

“There’s a lot more to an estate plan than just a will, even for folks who don’t need a more complicated estate-tax oriented version. You might have pieces of it already–a living will signed when you had elective surgery or a beneficiary form filled out for a 401(k) when you got your first job. You need to make sure the pieces fit together.”

Many couples or individuals are first motivated to create a will when they have young children, and the primary purpose of their will is to ensure that their minor children will be cared for and provided for should anything happen to the parents. This is certainly one of the best reasons to create your will or estate plan, but it is not the only reason, not by a long shot.  If you drafted your will when your children were young and haven’t looked at it since—or if you never created a will because you don’t have kids and therefore didn’t think you needed one—it’s time to revisit the subject.

An estate plan not only ensures that minor children will be provided for, but also that:

  • Older children have the means to continue their education if something happens to you
  • Your spouse or children are the recipients of your life insurance or retirement proceeds, and not the tax man or (even worse) an ex-spouse or ex-boyfriend or girlfriend.
  • You have someone trustworthy distributing your assets as you wish after you pass away.
  • Your business will transfer smoothly if you aren’t able to run it anymore.
  • And much more.

“Whatever motivates you, fine. The point is–whether you’re in estate tax territory or not, if you don’t have an estate plan, you need one. (And if you have a really old one, you probably need a whole new one.)” Any opportunity is the perfect opportunity to start planning to protect your loved ones.  Call our office (or your own trusted attorney) to learn what steps you can take toward protecting your loved ones right now.

Posts By: Gene Osofsky

The new estate tax laws (with their friendly bent toward the taxpayer) have been cause for celebration for many wealthy and affluent Americans, but there is at least one group which has not had cause to celebrate—gay and unmarried couples. Under current federal law, a married person could transfer an unlimited amount of their estate to their spouse upon death, free of taxes; but this generous marital deduction does not apply to same-sex couples—even if they live in one of the five U.S. states which recognize gay marriage.

A recent article in Reuters explains that “there is no [recognition of same-sex marriage] on a federal level, which means same-sex couples do not get the marital deductions on U.S. taxes. They also cannot make large gifts or pass on assets to each other without paying taxes.”

The new laws may help some same-sex or unmarried couples; for the next two years unmarried individuals may transfer up to $5 million upon their death tax-free. Alternatively, an individual may use his $5 Million exemption to make a gift transfer during life, but any exemption used to make a gift will offset the amount of exemption available at death.   But this isn’t permanent (the law will likely change again at the end of 2012) and anyone with an estate over  whatever the exemption will be thereafter will end up leaving their heirs with a hefty estate tax bill.

Luckily, some of these estate tax challenges can be overcome with some good estate planning and by thinking ahead. “If one partner has more assets, he can transfer some assets to his partner each year… Each year, individuals can make gifts up to $13,000 to any number of people.  Over time,  and by making annual gifts, one partner can even up the two partners’ estates and hopefully avoid a big estate tax bill when the richer partner dies.” If it’s clear that estate taxes simply cannot be avoided, the wealthier partner may want to consider setting up an Irrevocable Life Insurance Trust to cover the cost of estate taxes.

Beyond the issue of estate taxes, the article brings up the good point that “same-sex couples are more likely to face challenges to their wills, usually from family members who do not approve of their lifestyle.” This provides more incentive than ever to have a well-thought-out estate plan, which can be drafted with just such a possibility in mind.

Regardless of state of residence, same-sex or unmarried couples simply do not have the same benefits as traditionally married couples, which means that same-sex or unmarried couples have to plan carefully to achieve their estate planning goals.  It may require more forethought and effort, but the good news is that with the right kind of planning it is possible for non-traditional couples to protect and provide for the people they love.

Posts By: Gene Osofsky

Do your adult children know which of them will be your agent under your power of attorney if something happens to you?  Most people don’t want to think about Alzheimer’s, dementia, or getting old; and those who have thought about it often choose to keep their wishes secret, their documents held under lock and key until the time comes when they are needed.  But according to a recent article in Reuters, one of the most critical steps a parent can take toward preventing sibling fights is to state early and openly which adult child is their choice for agent, and the order of back up successors.

“In order to avoid conflict, parents [should] sit down with their children and spell out who has been appointed and why… It’s something that really has to be thought out in advance, hopefully before a crisis has arisen and while the parent is still able to express their goals.”

Open communication can go a long way toward smoothing relationships between family members, but if that by itself isn’t enough to keep the fights to a minimum, the advice of a trusted advisor can often dispel suspicions that may be brewing just beneath the surface. But don’t wait until arguments have already exploded, the best course of action is to consult with your advisor before intervention is necessary.  Asking your advisor to sit down with yourself and your family members gives each child a chance to ask questions and voice their concerns; it also gives them a chance to hear from your own lips what you’re planning and why you’re planning it. Sometimes a simple explanation may go a long way.

Posts By: Gene Osofsky

There used to be very few options for seniors who began to have trouble living on their own.  In many cases the only options available were to move in with family or move into a nursing home.  Now, however, that doesn’t have to be the case.  With new advancements in technology, the help of family and local aging services, and with some planning and forethought, many seniors will be able to live at home and on their own for many years. Here are a few things to consider right now if you want to age at home in the future:

Support System- Do you have family or friends nearby who can check on you regularly and help when home maintenance issues crop up? Having someone close to you who can provide you with transportation is helpful as well, although many cities have public transportation services that may be an option.

Home Renovations- Is your home senior or handicap friendly? Are doorways and hallways wide enough to accommodate a wheelchair?  Could you easily add ramps or lifts in place of stairs, if necessary? Do your kitchen and bathrooms facilitate easy maneuverability with as little reaching or bending over as possible?

Security or Medical Alert System- Having a security or medical alert system in place can provide immeasurable comfort to an elderly homeowner and his or her family.  The technology for this is improving by leaps and bounds, and there are a number of different options available.

In-Home Care Services- The length of time you can remain in your home can be greatly increased if you have the financial means for (and access to) quality in-home care services.  Someone to do basic cleaning and cooking, and help with daily activities, can prolong your time spent at home… but you have to plan for it.

Getting older shouldn’t mean you have to give up your home, your friends and neighbors, or your independence.  For more information about what you may need to stay in your home as you age check out the website for the National Aging In Place Council.

Posts By: Gene Osofsky

The dust surrounding all the estate tax law “remodeling” is finally settling, and it’s time now for families to give their old (or future) estate plans some serious scrutiny. For all of you who were waiting until Congress made some firm decisions on the estate tax laws—there are no more excuses. Forbes writers Janet Novack and Ashlea Ebeling explain in their recent article why—now that the estate tax is no longer in flux—it is so important to move quickly on your estate plan.

Many first time planners will be ready to take advantage of the new laws, now that the “hefty $5 million exemption, combined with a new portability provision, should allow many affluent couples to simplify their planning.” Couples with estate plans already in place will be able to take advantage of the new laws as well, but the motivation to update their existing plans may have more to do with the need to undo outdated formulas in wills and trusts that, with the new laws in place, may now do more harm than good.

“Many couples have old wills designed mainly to preserve the estate tax exemption of the first spouse to die, something the law now does. Under these old “formula” wills, when the first spouse dies assets equal to his or her federal estate exemption go into a “bypass trust” for their kids. The surviving spouse has access to the trust’s earnings and, if need be, principal, but what’s in the trust “bypasses” the survivor’s estate. Problem is, with the exemption jumping to $5 million (it was only $2 million in 2008) the survivor could be left with nothing outside the trust.”

The new estate tax laws are much friendlier to middle-income families, but don’t let that fool you into thinking you don’t need to plan at all.  “Whatever your age, marital status or net worth, you need a will (saying who gets your stuff); a living will (stating your wishes about end-of-life care); a health care proxy (naming someone to make medical decisions for you if you can’t); and a durable power of attorney (designating someone to act on your behalf in financial and legal matters if you can’t).” Not to mention you still may have state taxes to contend with in your estate plan.

Now is the time to call your attorney and talk about estate planning in the New Year. There is no more reason to procrastinate, and it’s your family’s legacy that’s on the line.

Posts By: Gene Osofsky

What is keeping you from signing a healthcare directive?

A recent article in Reuters mentions that only 2 out of 5 U.S. citizens have some kind of healthcare directive, and that our own U.S. laws might be the cause.  A study done by Rebecca Sudore of the University of California, San Francisco found that “Most states had practical restrictions that could make it difficult for many people to complete an advanced directive… In addition, many of the documents used in end-of-life planning were written in complicated legal language that the average person would have trouble understanding.”

Some portions of an advance directive might be written in complicated legal language out of necessity, but we don’t think that’s any excuse not to have one, especially not if you have a knowledgeable and trusted attorney who is willing to go through the legal language with you to ensure you are comfortable with it.  As for the other obstacles, the fact that “many states do not allow oral advance directives, and usually require that written documents have witnesses’ signatures, be notarized, or both…” and that currently “40 states do not automatically allow domestic partners and same-sex partners to become the default healthcare proxy;” well, these seem to us to be all the more reason to make sure you DO contact your attorney and get your healthcare directive in place.

A healthcare directive, along with a will and a durable power of attorney, are the three foundational documents of any estate plan.  Whether you choose to move on to more advanced planning techniques or not, every person should have these three documents at the very least.  These simple documents can end up saving you and your family a world of heartache and expense.

Of course, according to Reuters there is one other possibility about why you might be putting off your healthcare directive, “The biggest issue is that people do not want to do advance directives… There is a fear of planning for how we die.” Don’t let superstition keep you from protecting yourself or your loved ones.