Posts By: Gene Osofsky

There are only eleven days left in 2008. If you had plans for this year—things you were absolutely going to get done before 2009—you are quickly running out of time to do them. This doesn’t only include your 2008 picks from the 1000 Places to See Before You Die, this includes smaller things, more prosaic things, like tax write-offs or charitable deductions.

The New Year is generally a time for people to look to the year ahead and make their plan of action, but before you do that, you must review the year that is coming to a close. What were your goals for this year? Did you achieve any of them—or all of them? Especially important is to review all of your expenditures, both business and personal, to ensure that you’ve taken advantage of any opportunities for tax relief. Once you know you’ve put yourself in the very best position possible to close out 2008, then it is never too soon to start planning for 2009.

And the nice part is that should you choose to create or update your estate plan before the end of the year, and if your plan helps you protect income-producing property, you may be able to deduct a portion of the cost of planning your estate from your 2008 taxable income.

Don’t let 2008 slip away!

Posts By: Gene Osofsky

With the holidays approaching and the economy in crisis, we’re all trying to cut back financially, especially on what we think of as non-essential items. And one of the areas in which people are cutting back, according to this article by Leslie Wimmer, is the area of estate planning. Some people are cutting back by holding off on updates to their existing plans, some by waiting to plan at all, and some people are cutting back by creating their own wills and other legal documents using online legal software.

The thing you just can’t get around when you use an online service is that, as Wimmer quotes in her article, “There’s nobody to answer specific questions, and that’s what a lawyer does.  You might have all kinds of issues that, to you, don’t seem notable but to an attorney who practices in this area they might require special attention in your estate plan.”

The problem with using online software is that a website doesn’t explain how estate laws vary in different states.  Neither can it address your specific needs—especially if you aren’t even aware that you may have specific needs! And worst of all, in some states these software-created documents may not even be legal,  due to laws stating that only a licensed attorney can create a will for another person.

Choose your estate planning representation wisely.  After all,  your estate planning documents are designed to protect your family when you can no longer be there to protect them yourself.

Posts By: Gene Osofsky

Do you know who will be making your end-of-life decisions when you are incapacitated? If you haven’t named a Health Care Agent, it is possible that a family member who does not share your views or wishes, or with whom you are no longer close, may be asked to call the shots in an end-of-life situation. In Mary Clark’s case, the laws of the state of Nevada put her healthcare decisions into the hands of her long estranged daughter rather than her companion of 18 years.

Executing an Advance Health Care Directive and nominating a Health Care Agent is not just about choosing the right person to make the big life-and-death decisions for you.   It’s also about taking care of the loved ones you leave behind and giving them “permission” to follow your instructions.   Perhaps Mary Clark would have wanted to be removed from life-support, as her estranged daughter chose to have done, but she may also have wanted her beloved companion to be involved in the decision, and have a chance to say a peaceful goodbye.

Most people have strong wishes about life-support and end-of-life care, but rarely do they want those wishes to be an undue burden upon their loved ones. Creating a Health Care Directive which outlines those wishes is important not only for your own peace of mind, but also to ensure the peace of mind of your loved ones, those who will be left to mourn your absence after you’re gone.

Posts By: Gene Osofsky

The economy is reeling, stocks are plummeting, and most people want nothing more than to take their money, hide it under a mattress, and avoid any kind of financial or estate planning. Giving money away is just about the last thing on most people’s minds right now. But those with financial wisdom and experience (namely the Wall Street Journal) know that this is actually the perfect time to reassess your estate plan and to transfer wealth to your children or grandchildren with minimum (or no) inheritance tax.

Why would you want to give money away when times are so tough? Perhaps you’re like Dr. Tom Pedrick and his wife, who took advantage of depressed stock to transfer investment profits to their heirs through trusts, a move that was hugely advantageous once share prices rebounded. Or perhaps you feel strongly about helping family members whose finances may not have fared as well as your own, as Roger Dunham did. Or yet another possibility is that you’d like to invest in stock or property while prices are low, but worry about the tax implications when your investment appreciates in value.

If you aren’t ready to jump into new property or the stock market during these uncertain times, you may want to “consider how much you can accomplish with a pen and checkbook”, Anne Tergesen writes in her article, including paying “tuition and medical expenses for your grandchildren with no tax consequences.”

Whether you’d like to walk on the wild side of investing or play it safe by reducing the size of your taxable estate, there is no better time to get your estate in order than right now.

Posts By: Gene Osofsky

Every once in a while we’ll hear a story about a family for whom a trust was more of a hindrance than a help. Most often it’s because the trust was not created properly, or was old and outdated and hadn’t been reviewed by the grantors on a regular basis. But sometimes the conflict is more personal.

The possibility for conflicts within trust administration is no reason to keep from creating a trust; rather, it is why it is important to have a system in place to resolve these conflicts when they crop up. 

Options for conflict resolution or prevention may include having a dispute mediation clause in the trust document itself,  nominating co-trustees whom you know will be able to work well together, or nominating a Trust Advisor (also called a Trust Protector). 

A Trust Advisor is separate from the Trustee.  The Trust Advisor may be a professional, often an attorney, who can serve as a mediator between the beneficiaries and the trustee should any disagreements crop up. In addition to serving as a mediator in case of conflict, your Trust Advisor will also be the first person any of your beneficiaries can call on if they have questions about administration or distributions, or conflicts with the Trustee.  A Trust Advisor may also be given powers to modify the trust provisions to ensure ongoing compliance with law and changing circumstances, even after the incapacity or death of the Grantors.

Whatever your situation or preference there are options and tools to ensure that your wishes are carried out and your beneficiaries are provided for with as little conflict as possible.

Posts By: Gene Osofsky

The holidays are the perfect time for family reunions, family bonding, family fun …and, according to the Wall Street Journal the perfect time for parents and children to talk about family finances, family estate plans, and family decisions about end-of-life issues. After all, there are relatively few times each year in the lives of most families when everyone is gathered in the same place.

“While there’s no need to try to answer difficult health-care or legal questions on Christmas Eve,” says author Tom Lauricella, “the holidays offer a chance to start important conversations.” Lauricella points out that the holidays offer not only a chance for parents and grandparents to discuss some of these issues with their grown children, but also a chance for grown children to reassess how their elderly parents or grandparents are faring—and issue just as important as a discussion of retirement or estate planning.

So this year, along with the egg-nog and presents, families might want to consider the gift of peace of mind that comes with a bit of frank talk, surrounded by the love and cheer of the season.

Posts By: Gene Osofsky

Jane Gross over at the New Old Age Blog recently wrote a post about the prospect of enforced filial responsibility. Filial responsibility laws are patterned after Elizabethan Poor Laws and state that adult children are responsible for the basic needs of their parents, just as you would be for the basic needs of your spouse or your children. “Basic needs” includes food, clothing, shelter and medical care.

According to Ms. Gross, the filial responsibility laws are still on the books in 30 states, including California, Massachusetts, Indiana and Pennsylvania! (Gross includes a link in her post to a document listing all 30 states with filial responsibility laws.) These laws haven’t been enforced in a long time, but with the current economic crisis, and the rumor of dwindling Medi-CAL and Social Security resources as baby boomers age, is it such a far stretch to imagine that those laws may be enforced again someday? Perhaps even someday soon?

How hard would that be on the sandwich generation? It really wasn’t that long ago that elderly parents lived with their children. There was a time when it was not unusual to have three generations in one house; it was the norm, in fact.

Were these laws to once again be enforced, the real issue would not be food or shelter; rather, it would be medical care, daily home care, and length of life. The fact of the matter is that we are living longer today than we ever have. In some cases those added years are high-quality, but often those years are spent in a slow decline into Alzheimer’s or dementia, both of which eventually require round-the-clock care. With modern families generally needing two incomes just to stay afloat, where would that care come from?

This isn’t an issue that we necessarily need to worry about right now, but it is one that is important to consider. Most of us would choose to take care of our parents rather than see them out on the street, regardless of whether or not we were required to by law, but the cost of doing so rises every year—and rises with every year we add to the average life-span. What happens when it’s not just the impoverished elderly we need to worry about, but newly impoverished middle-agers as well?

Posts By: Gene Osofsky

Individuals with mental illnesses already have a number of unique challenges to face, and now Time Magazine tells us they have one more terrifying prospect, because, according to Time’s recent article by Kate Torgovnick “on average, people with severe mental illness die 25 years younger than the rest of the population.”

There are many contributing factors to this shocking figure, but one of the main reasons the article gives is that “people with serious mental illness tend to be low on the socioeconomic totem pole and don’t often get the best available health care.”

The real tragedy in this scenario is that it doesn’t have to be this way. With the right planning—either by the individual in question or by loving friends and family—someone with a serious mental illness could still have access to the best medical care. And a special needs trust complete with provisions for an advocate or an advisory committee will provide the beneficiary with further protection; someone to ensure that his or her needs are being met, and any ailments are taken seriously by medical professionals.

With enough education and planning, perhaps we can improve the situations of those with mental illnesses… and change that shocking mortality rate as well.

Posts By: Gene Osofsky

Growing old alone can be tough, but it might be what many of our parents and grandparents will be forced to do in order to protect their assets and still qualify for Medicare. In her article Caring for Aging Loved Ones Can Be a Catch-22, journalist Gail Sheehy describes how she learned the hard way about Medicaid’s “policy of pauperization” when she supported her husband during his long battle with throat cancer. For California readers, the Medicaid program is known as “Medi-CAL”.

“If the couple first exhausts all their remaining assets, then Medicaid will cover nursing care. And if Sheehy, in her late 60s, wasn’t willing to give up all her assets and income?

‘Then, you need to divorce him,’ the geriatric care manager told her.”

It seems that at a time when couples most need the health, security, and emotional support that come from a loving spouse, they learn that they may not be able to afford to be married!

But the difficulties don’t end there. The U.S. News & World Report article above shows that a “policy of pauperization” is only part of what’s wrong with our long-term healthcare system. Poorly trained caregivers, piecemeal medical treatment—these and more are what await you if you’re a middle-class aging American.

So when you’re investigating how to protect your assets and your future with an estate plan, be sure to find out how you can achieve the same goals in the event that you need long-term care as well.

Posts By: Gene Osofsky

Senior couples often ask how they might protect each other from the devastating financial cost of long term nursing home care.  This is a real concern, as nursing home expenses average $9,500 per month in our community,  and are likely only to increase over time. This concern is all the more real for those who have experienced the financial  and emotional devastation that such expense can cause, perhaps by having to help a parent or other loved one meet those costs.

The good news is that our firm has developed a very special plan that we believe addresses those concerns, as well as the more traditional question of, “Who gets our stuff when we both pass on”.  We call this design the “Spousal Protection Plan”, or the “SPP”.

The SPP incorporates very special powers into the estate plan. These powers authorize the “Well Spouse” to take appropriate steps if necessary in the future to both seek a government subsidy for the Ill Spouse’s nursing care under the Medi-Cal program, and to protect the couple’s estate from “payback” after the demise of both spouses.  By taking these steps, the plan is designed to minimize or avoid the financial devastation to the couple’s savings, investment, home and other estate assets, and thus avoid impoverishing the Well Spouse at home and, ultimately, to protect their children’s inheritance.

We do this in a very special way. We include in the planning documents appropriate powers to qualify for a government subsidy if needed in the future, and we integrate the various estate planning documents so that they work together.  The Living Trust, the Durable Powers of Attorney, and the companion Wills are all specially designed and integrated toward this end. Of course, they also contain the more customary provisions which provide for what we call “death planning”, i.e the disposition of assets upon both spouse’s demise.

We are pleased to offer  the SPP to our clients, as we feel it addresses an ongoing critical need.  Note:  when one spouse is already incapacitated and unable to participate in planning, we suggest Planning For An Incapacitated Spouse as an alternative. Click here for an article entitled “Planning For An Incapacitated Spouse Using A Special Needs Trust”.

OSOFSKY & OSOFSKY, the “LawyerForSeniors”