Posts By: Gene Osofsky

Apparently the suspicion surrounding end-of-life planning is not as far in the past as we might have hoped.  The recent Medicare regulation which would have allowed the government to pay doctors who advise patients on options for end-of-life care was rescinded only days after it was enacted.

Why such an abrupt turnaround?  The reason is probably not too difficult to guess.  Most people know that Medicare-covered end-of-life planning has a tempestuous history both in politics and in the media.  This article in the New York Times stated that “while administration officials cited procedural reasons for changing the rule, it was clear that political concerns were also a factor.”

The alteration of the rule may be disappointing, but it shouldn’t stop you from thinking—or talking to your doctor—about your choices for your own end-of-life care.  After all, this administrative change of heart does not alter the fact that having these discussions with your doctor (as well as with your health care agent and loved ones) preserve patient autonomy at a time when events may seem to spiral out of control.  As National Public Radio pointed out in their article, “it remains perfectly legal for physicians to talk with patients during annual visits paid for by Medicare about how much or little care they want when facing a terminal illness.”

Media firestorms and political debate notwithstanding, your decisions about your end-of-life care are important.  When you have these discussions with your doctor and loved ones, and when you have a living will or healthcare directive in place, you are far more likely to get the care you want at the end of your life, regardless of how invasive or restrained you want that care to be.

If you have reservations about what a health care directive might mean to your future medical care, or if you have any questions about this issue, you should discuss your concerns with both your doctor and your elder law or estate planning attorney. Appropriate legal documents can be drafted that will address your wishes and be clear to your physician.

Posts By: Gene Osofsky

The hardest part of legacy planning or estate planning isn’t necessarily choosing the right fiduciaries, or deciding how to distribute your wealth fairly among your loved ones… the hardest part of legacy planning or estate planning is often simply talking about it with family.  In fact, having “The Discussion” can be such a daunting task that many families simply don’t do it, choosing instead to take their chances when the family patriarch or matriarch passes away and the succession plan is revealed.

But avoiding the subject isn’t going to do you or your family any favors.  More family infighting takes place after a death than at any other time.  After all, this is when loved ones are grieving and emotions are high, when the central family figure or peacemaker may no longer be with you, and seemingly unequal inheritance distributions can no longer be explained.

What if there was a way to have “The Discussion” before it was forced upon you?  What if there was a way to make that legacy and estate planning discussion low-pressure and even fun?  That is exactly what husband and wife psychologist team Carolyn Friend and James Weiner have done with their book and accompanying card game, The Legacy Conversation: the missing gem in wealth planning.

A review of the Conversation Starters card game in Forbes gives a more detailed description of the game, including 7 or so sample questions to get the juices flowing; obvious questions such as “What cherished possession might your family fight over?” to the not-so-obvious questions such as “Have you ever found wisdom in a song’s lyrics? Name that tune.” The point of the Conversation Starters is not merely to discuss the family legacy, but to get to know your family members better, enjoy each other, and perhaps even grow closer in the process.

If your family has been putting off the necessary discussion of succession and legacy planning, this might be just the game you need.  Don’t be afraid to tackle the difficult subjects, you might find you enjoy them more than you expect.  And when you’re ready, we’re here to help with the practical details and legal legwork.

Posts By: Gene Osofsky

We spend our lives making plans and preparing for future events. From the beginning we plan and work towards education, a career, marriage and a family. We work hard and save, invest and build our assets. We insure to protect our home, automobiles, health and medical needs. 

Retirement age comes and our plan is finally in place. Finances and time have come together to allow us to enjoy the elder years of life. This is where the planning ends. But life does not end at retirement. There is a portion of life that the majority of us will live through after the retirement years called “eldercare.”

 Very few of us plan for this part of our life, but yet it is as important if not more important to plan for it. If we don’t, we are leaving our last years in someone else’s hands. As much as children love us and mean to do right by us, they cannot possibly know what we want if they are not told. 

Ruby, age 80, lost her husband. She had cared for him at home after his stroke. Understandably, she felt lost and depressed after his death. An inner ear infection caused Ruby to lose her balance and fall, breaking her hip. While she was in the hospital recuperating from surgery, Ruby’s children were deciding her future. 

Concerned for her health and safety they moved some of her belongings to an assisted care facility. Upon Ruby’s release from the hospital she was taken to her new home at the facility. Between pain medication and the unfamiliar surroundings, Ruby never was herself again. She spent her last days asking what had happened to her home and belongings. Though her children had her best interest at heart, they did not know how Ruby wanted to spend her elder days.

An article on the AARP website entitled, ” Are Americans Talking With Their Parents About Independent Livng“, revealed that “Most boomer women have had conversations with their parents about their ability to live independently as they ge tolder, but less than half have actually begun planning for care their parents might need.”  Without talking this over,  it can be difficult to know if parents really need, or want, help from their children.” 

Children and parents should talk about all these things. 

What do you want your children, or friends to do on your behalf? When it comes time for them to help, you may not be physically or mentally able to execute your wishes. This is where your long term care plan comes into effect. You need to be the responsible person for your own personal care in the future. 

The time to start planning is now.  Don’t wait until the choice is no longer yours!

Posts By: Gene Osofsky

There is a common complaint among Baby Boomers when it comes to aging parents and grandparents: It’s hard to keep in touch with them. Most communication among the middle and younger generations now takes place on the computer—e-mail, Facebook, electronic photo-sharing and more.  Very rarely do we pick up the phone for a good old-fashioned chat; and when we do it’s usually on the go, in the form of a quick call or text message from our cell phones.  Unfortunately, where all this technology helps us to be more connected to friends and family in our own cohort, it ends up leaving our elderly loved ones out of the conversation.

Karen Stabiner, in her article “Elder Tech: What’s Important” argues that it doesn’t have to be this way.  Stabiner states that the key to getting elderly relatives involved in high-tech  communication is to get out of our own heads and look at it from their point of view. “For technology to become ‘sticky’ with the older generation, we have to get into their heads and understand what would make them think this is fun… The bells and whistles that might attract us are too often counterintuitive [for them.]”

The younger, tech-savvy generations tend to look for high-tech devices that do everything, but that’s not necessarily what’s going to be appealing to grandma or grandpa.  This article in GrayTimes.com suggests that single-purpose gadgets—devices designed only for e-mail or only for sharing photos—are more intuitive for elderly users.

New high-tech devices may be harder for parents or grandparents to use, but being able to connect with their loved ones can be a huge motivating factor.  Being able to communicate with family makes our elderly parents and grandparents happy, but it also helps keep them safe.  Adult children who communicate with their parents on a regular basis are better able to recognize and respond when mom or dad suddenly have trouble caring for themselves.

Posts By: Gene Osofsky

What are your resolutions for 2011? A majority of New Year’s resolutions have to do with money and health—or more specifically, with saving money and losing weight.  Unfortunately, most New Year’s resolutions don’t last through the first month of the year.  But what if there were steps you could take in that first month, when you’re still feeling inspired and motivated, that would pay-off throughout the rest of the year when all your good intentions fall by the wayside?

Luckily, there are steps you can take right now that will help you save money throughout the rest of the year. This article in USA Today lists 5 steps you can take right now to help you save money in 2011:

  1. Order your free credit report
  2. Get a medical exam
  3. Update your beneficiaries
  4. Increase your 401(k) contributions
  5. Rebalance your portfolio

All of these will help you keep your 2011 resolutions throughout the entire year, but the ones we’re most concerned with are #s 2 and 3.  Too many people “take care of business” pertaining to beneficiaries and 401(k)s when they first get hired (or open a new account or life insurance policy) and then never think of it again. But lives change over the years, and the people you listed, or the amount you contributed 5 or 10 years ago is probably not what’s best for your family right now.

The New Year brings with it new beginnings… and new hopes.  Why not take advantage of this feeling of optimistic euphoria by taking steps now that will carry you through the entire year?

Posts By: Gene Osofsky

Advance Health Care Directives (legal documents which include a nomination of your health care agent, and your preferences for end-of-life care) saw a lot of press in 2009 when the Obama administration sought to include end-of-life planning in the new healthcare overhaul.  The option was dropped after a media firestorm about “death panels,” but according to this article in the New York Times Medicare-funded end-of-life discussions may be back.

According to the new regulation, Medicare will pay for “voluntary advance care planning” as part of patients’ annual visits with their doctor.  “Under the new policy, outlined in a Medicare regulation, the government will pay doctors who advise patients on options for end-of-life care, which may include advance directives to forgo aggressive life-sustaining treatment.”

The reasoning behind the new regulation is simple, and something estate planning lawyers have known for a long time; “research [has] shown the value of end-of-life planning. ‘Advance care planning improves end-of-life care and patient and family satisfaction and reduces stress, anxiety and depression in surviving relatives.’”  Additionally, “end-of-life discussions between doctor and patient help ensure that one gets the care one wants.”

So why does end-of-life planning make so many people uncomfortable when research has shown just how beneficial it can be?  Paula Span, author of this post on the New Old Age blog thinks it might simply be a matter of semantics, especially when it involved the term “Do Not Resuscitate.”   Ms. Span argues that a more friendly term such as “Allow Natural Death” could make all the difference in the world.

“The phrase “do not resuscitate” signals an intent to withhold or refuse… ‘It says you’re not going to do something.’ To “allow natural death,” on the other hand, connotes permission. ‘It doesn’t sound so overwhelming or scary.’”

Whatever term you use, or however you choose to talk about it, the important thing is that you DO talk about it—with your family and loved ones, with the person you choose as your agent, with your doctor… and even with your lawyer.  End-of-life planning is about personal and medical preferences, but the document itself is a legal one; your lawyer can help ensure that your Advance Health Care Directive will hold up in a court of law as well as in the hospital.

Posts By: Gene Osofsky

The idea of adult children caring for aging parents or grandparents is not a new one. In fact, with the aging Baby-Boomer population, adult children giving up free time or extra hours at work to care for relatives is a growing trend. But recently families have begun creating “caregiver compensation agreements,” something which can end up benefiting both parties in a number of ways.

According to a recent article in the Wall Street Journal, “the high unemployment rate, the rising cost of nursing-home care, an aging population, and a 2006 change in Medicaid law that makes it harder for people who wish to qualify to give away assets” are all contributing factors to the growing trend of these compensation agreements among family members. Note:  Medicaid is called “Medi-Cal” in California.

How can it help you?

If you’re a caregiver the benefits of a caregiver compensation agreement are fairly self explanatory. “Some 37% of caregivers surveyed by the NAC in 2007 said they had quit a job or reduced their hours to accommodate their responsibilities,” some kind of compensation seems only fair.  And if you feel uncomfortable taking “wages” from your parents, there are other ways to arrange for compensation. “Attorneys say many families pay an hourly wage. As an estate-planning tactic, others opt for annual gifts or a lump-sum payment designed to cover services over an extended period. Some arrange for the caregiver to receive a larger inheritance.” It will all depend on what works best for your family.

If you’re the one receiving the care, compensation agreements can benefit you as well. Paying a family caregiver can help you deplete your savings and qualify for Medi-Cal,  which might then help if you later need a nursing home subsidy.  Doing so can also help you reduce your taxable estate, as well as give a gift of sorts to younger family members who may be in need. Remember the Medi-Cal rules are tricky, so best to enlist the help of an Elder Law attorney before creating any care contracts.

However you may decide to structure your compensation agreement, disclosure can be of the utmost importance. Make other family members aware of the agreement up front to avoid suspicion or hurt feelings later on.

Posts By: Gene Osofsky

It has been a long and uncertain year for anybody interested in the future of the estate tax, filled with a few ups, a few downs, and a lot of speculation.  But after the recent passage of the new bipartisan tax bill all of the confusion and speculation is finally at an end, and it’s very close to what we anticipated early last week.  The bill is good news for most taxpayers; the Wall Street Journal says there are “many winners, a few losers,” and according to the New York Times “Almost no one will have to worry about paying the estate tax under the tax legislation just approved by Congress.”

Here is a brief overview of what you can expect in 2011:

New Estate Tax Exemptions and Rates: The new bill sets the estate tax exemption at $5 million per individual ($10 million per married couple), with amounts over the exemption taxed at a 35% rate.  This is opposed to the $3.5 million exemption and 45% rate some lawmakers were hoping for.

Tax Election Option for 2010 Estates: As mentioned in a previous post, this is one of the biggest parts of the new bill. There may have been no estate tax in 2010, but there was also no “step up in basis,” meaning that heirs selling inherited assets were taxed based on the original acquisition cost of the assets, not on their value as of the date of the taxpayer’s death, as is usually the case.  This led to a higher tax paid on the assets if and when they were sold, in spite of the lack of estate tax. Tax election gives 2010 estates the choice of whether to use 2010 or 2011 tax rules—a happy option for 2010 heirs.

Estate, Gift, and Generation-Skipping Taxes: In recent years these three levies have had varying exemption levels, making gift giving and succession planning a challenging exercise at best. The unification of all three makes tax planning and giving gifts to grandchildren much easier than it used to be.

Individual Income and Payroll Taxes: The new bill wasn’t just about estate taxes; it also extends the Bush-era income tax rates; this is good news as it prevents a rise for nearly all taxpayers.

How Long Will It Last? We’re all glad that the waiting is over and we finally know what to expect, but the new law is only effective through 2012, at which point the provisions will “sunset.”  So we have a two year reprieve, but the estate tax issue is far from over and we will have to revisit the issue again toward the end of 2012.

With the threat of high estate taxes out of the way does any reason remain to create (or update) your estate plan? Absolutely!

Estate planning is about more than just planning for taxes, it’s about taking control of your assets and choosing how your estate will be distributed.  Divorce, second marriages, planning for college, charitable gifts—these are just a few of the reasons why estate planning is essential regardless of the state of the estate tax.

At the very least, the recent fluctuation of the law means that you’ll want to have your existing plan professionally reviewed and updated to ensure you don’t have any outdated clauses that could negatively affect your heirs.

Posts By: Gene Osofsky

It looks as if the long and weary road to estate tax clarity ended on 12/17/2010 when President Obama signed the compromise tax package negotiated with Republican leaders.

Here are some quick highlights:

Tax Election for 2010 Estates: This is one of the biggest parts of the deal. The bill gives 2010 estates the choice of whether to use 2010 or 2011 tax rules. This is good news because  it gives the estates of persons who died in 2010 a choice whether to be reated under the “old law” (with less favorable capital gains features but an unlimited estate tax exemption) or under “new law” (with more favorable capital gains features and a generous $5 Million/person estate tax exemption).

 Unification of the Estate, Gift, and Generation-Skipping Taxes: In recent years the gift tax and estate tax exemptions have been different, complicating succession planning for family businesses and other matters. With the new deal, however, there will be a simple $5 million per-individual exemption for  both gift tax and estate tax.  The unused gift tax exemption could later be used upon death.

And of course we can’t have a conversation about estate taxes without discussing Effective Date and Duration: The effective date of the new provisions is set to be January 1, 2011.  However, the new law only has a two (2) year term and then sunsets as of 12/31/2012.   What this means is that the new tax package may be only a temporary reprieve, and we could be going through all of this again in 2012-2013.

Stay tuned. We will be writing more on this topic very soon.

 

Posts By: Gene Osofsky

Many modern families have members living all over the country—and all over the world.  Which means that the holiday season provides one of the only times to all get together in person, celebrate, catch up… and talk about caregiving strategies for aging parents. Unfortunately, this kind of conversation can be a difficult one, especially if not all siblings agree about mom or dad’s needs, or if one sibling feels that he or she shoulders an unfair amount of responsibility. In spite of the difficulty, having the conversation can be of the utmost importance.

In this article in Time Magazine author Francine Russo describes the consequences that can follow when lines of communication break down. “It wasn’t until my mom’s funeral, watching my dad and sister cling to each other and weep, that I got a hint of their long ordeal — and how badly I’d screwed up.”

Russo makes the point in her article that much of the tension and disagreement among siblings can come from inaccurate or conflicting information. “Friction often stems from parents giving their children different information about how they’re doing. Mom may put on a good show for the out-of-towner, who then discounts what the local sibling says.” This is all the more reason for siblings to communicate with each other, not just through mom or dad.

If you aren’t sure how to get the conversation started, Paula Spencer, senior editor for Caring.com wrote this article for Third Age which gives some helpful strategies on how to ease into the difficult topic of caring for aging parents this holiday season.