Monthly Archives: October 2010

Just Say No? Medical Marijuana in Nursing Homes

The legalization of marijuana is on the ballot in California this November, but California isn’t the only part of the country where marijuana is making news. The use of marijuana for medical purposes is being debated around the nation—especially as concerns elderly patients in nursing homes which receive federal funding through Medicare or Medicaid.

This article on the New York Times’ New Old Age Blog reports on this issue, and just how concerned and confused nursing home facility administrators are about what their options are and how to proceed. “Any patient using medical marijuana breaks federal law. Marijuana is listed as a Schedule 1 drug, which means the federal government considers it to have no medicinal value. Despite this, physicians in 14 states and the District of Columbia are allowed to recommend it. . . Many facility administrators wonder how they can comply with federal law and preserve their reimbursements and at the same time permit residents to medicate with marijuana.”

Federal funding isn’t the only conflict attached to the medical marijuana issue. Nursing homes in New Mexico (a state where marijuana was legalized for medicinal purposes in 2007) report that “the lack of dosing direction has caused problems. . . Pills in nursing homes are in what they call vacuum packs: you have to pop a pill out one at a time. They don’t do that with marijuana. It’s an amount of marijuana in a small plastic bag, so there is no way to track if someone took one or two pinches.”

Another issue to consider is the stigma attached to marijuana use, and complaints from other patients or residents.

Medical marijuana is generally prescribed to seniors to help them deal with chronic pain. Oregon’s long-term care ombudsman, Mary Jaeger, asks in the article above “Wouldn’t any one of us, in our own homes, feel that we have the right to live our lives by our own values and choices, to preserve our own dignity and, frankly, to live pain-free?” Will seniors moving to federally supported nursing homes have to find other ways to deal with chronic pain? And more importantly… will they be willing to do so?

How to Find the Best Long-Term Care Policy

As the average life-span increases—and the cost of medical care along with it—more and more people are beginning to see the need for long-term care insurance. Simply having a retirement plan isn’t enough anymore. Saving for retirement now means not only saving for your living expenses, it means preparing and saving for your health care expenses as well; expenses which will most likely include major medical procedures, eventual in-home care, and perhaps even long-term nursing care.

The idea of long-term care insurance is no longer a new and strange one, but it’s still not a concept most people feel completely comfortable with. What kind of long-term care insurance should you be looking at? Can you get coverage for your entire life? (Probably not.) What types of care and services will be covered? (Each policy will vary.) Can you get a policy that goes into effect right away, or is there a waiting period? (There is often a waiting period.)

Not all long-term care policies are created equal. The U.S. News and World Report recently published an article advising 7 things to look at when choosing a long-term care policy. Some of the things you’ll want to pay attention to include the benefit amount, the benefit period, which services are covered, and inflation protection, just to name a few.

Choosing a long-term care policy is an important step, and not one to be taken blindly. If you are confused about long-term care policies, or unsure of which one may be right for you, don’t hesitate to ask the advice of a professional. Insurance agents, financial advisors and estate planners may all be able to help answer your questions or point you in the right direction.

“Nothing Says Romance More Than A Prenuptial Contract.”

You may have your doubts about the sentiment above (which is also the opening line of a recent article in the Wall Street Journal) but many couples are beginning to see the truth of this statement. Younger couples, older couples embarking on second marriages, and couples with family businesses or assets to protect are coming to realize that prenuptial agreements can actually take the pressure off a relationship, making more room for romance rather than less.

A recent ruling in Britain’s Supreme Court has thrown prenuptial agreements back into the limelight, not only in the U.K. and Europe, but also here in the United States. The above-mentioned article in the Wall Street Journal offers a few basic guidelines for couples considering drawing up a pre-nup, the most important of which include: there must be no signs of duress, each party must have their own legal counsel, and nothing concerning children can be fixed in a pre-nup.

But if you’re on the fence about whether or not a prenuptial agreement is right for you and your spouse-to-be you may be most interested in the final paragraph of the article, which states that “Prenups are romantic… You’re making a provision for somebody. You’re saying, ‘I want you to know now that you’ll be alright’… this should be part of the process of falling in love and going forward with that commitment.”

Take Care in Making Large Gifts to Heirs

Do you have a provision in your will or trust to pass your house on to your kids when you die? If so, you may want to consider giving the house to them now, before the end of the year. According to this article in the New York Times, doing so could be beneficial to both your heirs and yourself.

It’s easy to see how your heirs might benefit from receiving at least part of their inheritance now. The lapse in the estate taxes only last through the end of the year, “it is scheduled to come back next year with a vengeance. Unless Congress changes current law, the estate tax rate will be 55 percent (60 percent in some cases) on all but the first $1 million, except for what you bequeath to your spouse or charity.”

What may not be quite as obvious is how gifting a large asset right now can benefit you as the giver. “By shifting real estate now, you remove the asset and any subsequent increase in its value from your estate — an especially timely move if your property’s value is depressed and you expect it to bounce back at some point. What’s more, if you wind up owing tax on the gift, the rate now is less than it may be later. Barring Congressional action, the tax rate for 2010 is 35 percent, rising to 55 percent on Jan. 1.”

Making such a large gift is not necessarily without its “hurdles” as the article calls them. Amongst these hurdles include deciding whether you want to continue living in the house, whether to break up interest in the asset or keep it as a cohesive whole, and the potential awkwardness of having a business relationship with family. The article offers a number of thoughtful solutions to these issues, all well worth considering.

As beneficial as such a gift may be to both grantor and recipient, we strongly urge you to discuss the details of such a large gift with your estate or financial planner before you take any action.

Plan Ahead to Avoid Financial Pitfalls in 2011

A recent article in U.S. News and World Report points out that although “the Great Recession may technically be over… Consumers [still] don’t want to spend and are still slowly digging their way out of the mountain of mortgage and personal debt that helped fuel the downturn.” Among those groups who are still struggling the most are seniors and retirees, many of whom took a devastating hit to their retirement investments and savings, and are still struggling to recover.

Unfortunately, according to the article, 2011 may bring with it some new financial concerns for seniors. Some of the “major money issues” seniors will have to think about in the coming year include a zero cost of living adjustment from the Social Security Administration, changes to certain Medicare policies, a rise in income and capital gains tax rates, and the return of the estate tax, among others.

Although the article itself offers no particular solutions to these financial concerns—it merely gives a warning of what’s to come—there are steps you can take to avoid some of the worst financial pitfalls. Because each individual situation will be different there is a danger to blindly following (or offering) standard advice across the board. However, with consultation and careful planning there are a number of strategies estate planners can recommend that may help your family protect your assets now, and when the estate tax returns. Forewarned is forearmed, and taking the time to consult with your estate or financial advisor and plan ahead may be the best action you can take.

Can You Foolproof Your Power of Attorney?

“The best laid plans of mice and men often go awry.” Although we hate to admit it, this statement will also sometimes apply to estate planning; and more often than we would like, it happens with powers of attorney.

A power of attorney is the document in which you nominate an agent (or attorney-in-fact) to make financial decisions and take legal action for you when you are incapacitated or otherwise unable. (This does not include healthcare decisions, covered in another document called a health care directive.) Unfortunately, as this recent article on the Elder Law Answers website points out, “many people experience difficulty in getting banks or other financial institutions to recognize the authority of an agent under a power of attorney.”

This difficulty usually has nothing to do with the validity of the document; rather, it is the bank’s attempt to protect itself. But while a little bit of caution is understandable, it can have frustrating—or even tragic—results if not addressed. Luckily, there are steps you can take to improve your chances of having your power of attorney honored. The article mentioned above includes a number of good suggestions:

* Talk to your bank about your plans ahead of time.

* Ask your financial institutions if they have any requirement for powers of attorney, or even their own standard form.

* Update your power of attorney forms or documents frequently (every 2-5 years.)

    Talking to a representative from your bank every 2-5 years may seem like an inconvenience now, but imagine the inconvenience if you are incapacitated and your agent is unable to access the funds he or she needs to pay your bills, make your mortgage payment, or provide for the needs of your family. A little bit of time spent now can save a mountain of stress later on.

    What Is Probate?

    With all the recent news about what will happen with estate taxes, the process of probate has come up quite a bit. Sometimes probate is mentioned in a low-key, matter-of-fact kind of way; at other times it is presented as something scary, and to be avoided at all costs. We know our readers have seen the term often enough here in our blog, but under the circumstances we thought it a good idea to go back to basics, and have a discussion of exactly what is probate, and what’s all the fuss?

    Probate is the process by which the court determines the legal property of a person who has died, and facilitates the distribution of those assets. It sounds like it should be simple, but even in the best of circumstances there are procedures that must be followed to the letter, and the actual process (depending on the size of the estate and the laws of the state in which the property is being probated) can take anywhere from 6 months to a few years.

    You may wonder why probate can take so long, especially if the deceased person has left a will making their wishes clear. A good will can certainly make the process easier, but even with a will, there are certain steps that must be followed to complete the probate process, some of which can be very time consuming. Some of these steps include:

    * The appointment of an executor or personal representative

    * Verification of the will

    * Taking an inventory of assets belonging to the deceased

    * Giving notice to creditors

    * Paying valid claims against the estate

    * Preparing and paying taxes

    * Notifying beneficiaries

    * Distributing the assets to the beneficiaries or heirs

    If you think that just reading the above paragraph takes your breath away, imagine the confusion of having to actually go through all of those steps—and possibly more!

    Whether or not your estate will eventually be subject to a lengthy or expensive probate often depends on a number of factors: the size of your estate, how your assets are held, and how cooperative your next of kin may be. But one way to increase your chances of avoiding probate is to have clear (and clearly valid) estate planning documents, including a will, power of attorney, and possibly a revocable living trust.

    If you are concerned about probate, or would like to know more about how you can protect your assets and help your loved ones avoid a lengthy probate, contact our office—or a qualified estate planning attorney in your home state—to discuss your options.

    Prepare Now for an Uncertain Future

    There’s a useful saying that goes something like this: “Expect the best, but prepare for the worst.” Never has that saying been as useful as it is right now in regards to asset protection and estate planning. As Laura Lallos mentions in her article in the Morningstar Advisor, “Estate attorneys are trained to prepare for every contingency. But how do you plan for the unimaginable? Who would have predicted a U.S. tax system with no estate tax at all–and no certainty about what the estate tax will look like in 2011?”

    Planning for the future when the future is so foggy is a challenge at best, but this unique year for taxes offers some once-in-a-lifetime opportunities for giving and saving as well. This seems to be a time of contradictions. As the article points out, “The best strategy that financial advisors and attorneys can pursue now is to prepare their clients for the worst. On the bright side, some clients can also seize opportunities created by the gaping holes in the tax law for 2010.”

    The article suggests a number of strategies that you can implement now to prepare for an uncertain future. Some of these include:

    Give monetary gifts now, when the gift tax rate is a low 35%, in order to lessen your taxable estate.

    Take advantage of the one-year-only lapse in the Generation Skipping Transfer Tax.

    Create a Grantor Retained Annuity Trust before the end of October to take advantage of the currently very low Section 7520 rate.

    See your estate planner and make sure your estate and asset protection plans truly are “prepared for the worst.” We may not yet know what next year will bring, but that doesn’t mean we can‘t take steps to ensure our clients are prepared for whatever the future may hold.

    What to Do With Your Estate Plan After a Divorce

    When it comes to estate planning, the steps you take after a divorce are not so different from the steps you’ll take after a death—many of the phone calls will be the same, many of the changes you make and details you change will be similar. This all makes sense, because a divorce is basically the death of your marriage, and in the financial and legal world your marriage was an entity all its own.

    The first question most people ask is “Who gets the estate plan?” The answer is that both of you and neither of you get the estate plan. Ideally, you both put a lot of thought into your estate plan and it reflects both of your wishes. All of this work was not for nothing. The details of your plan will have to change, this is true, but the basic ideals will most likely be the same.

    Your first order of business should be to change your beneficiary designations. Most married couples name their spouses as the primary beneficiary on insurance policies, retirement accounts, wills and trusts, with their children or immediate family members named second. Unless you think your ex-spouse deserves to benefit from all your hard work you’ll want to remove him or her as a beneficiary immediately. (Documents to change: will, trust, ALL life insurance policies, IRA or 401(k) accounts, savings accounts, investment accounts, POD or TOD accounts, credit card insurance policies.)

    Your second order of business will be to amend your agent/executor/trustee. It is likely that while you were married you named your spouse as the primary person in all of these roles; you’ll now want to move your secondary nominee to the primary position, or find someone new. (Documents to change: will, trust, All powers of attorney, health care directives, nomination of conservator, emergency contact forms.)

    Not necessarily your third order of business, but somewhere in there you may want to change your nomination of guardian. You and your ex-spouse probably chose people you both knew and trusted to be guardians of your minor children if anything happened to both of you. Divorce can bring up many powerful emotions and hard feelings, so although these people are probably still good and trustworthy people, you may want to nominate someone else. Depending on your custody arrangement, your ex-spouse will still be your children’s primary guardian if anything happens to you. This doesn’t mean you shouldn’t execute a new nomination of guardians, but keep in mind that your nomination of guardians will only come into play if your spouse dies first. (Documents to change: nomination of guardians, anti-nomination of guardians, nomination of conservator, emergency contact forms, authorization for custodian consent to medical treatment of minors.)

    The most important thing to remember is that the more you put it off, the more likely it is that your wishes will go unacknowledged. As a rule, it’s a good idea to visit your estate planning attorney after any life change, especially one as significant as divorce.

    10 Phone Calls to Make After the Death of a Loved One

    Coping with the death of a loved one can be a crushing task. There are so many things to do and details to remember; all of this at a time when each small task can serve as a reminder of your loss. At such a time it can be helpful to know that you’re not going through this alone; there are a number of people who can help when you begin to feel overwhelmed. To relieve some of the stress, and help ensure that no important task is forgotten, we offer a list of people to call after the death of a loved one:

    Funeral home - This will likely be your first call. The funeral home you or your loved one has selected will be able to help you with a lot of the immediate details and tasks. The funeral director will also be able to help you obtain 10-20 copies of the death certificate, something you will need later.

    Family and Friends - This probably goes without saying. Not only will you want to notify family and friends, but they can also help with a lot of the endless tasks and overwhelming details. Don’t be afraid to delegate.

    Veteran’s office (if deceased was a Vet.) - If the deceased was a Veteran you may have to stop benefit payments; you may also be able to get assistance with the funeral or memorial service.

    The deceased’s employer - You will need to do this not only to inform the employer of the death, but also regarding termination of health insurance.

    Attorney or Tax Professional - You will need to know what to do about probating the deceased’s estate, filing tax returns, dealing with bank accounts, etc. An attorney or tax professional can help. It is especially important to find out if your loved one had any existing estate documents.

    Office of Social Security - If your loved one was receiving benefits you’ll need to stop payments. You will also want to find out if survivors are entitled to any benefits.

    Insurance company of the deceased – You will probably need to file a claim. This is something your attorney or accountant may be able to help with.

    Local Newspaper - You’ll want to publish an obituary or notice of death, as well as information about the funeral or memorial service.

    Credit card companies and utilities - Give notification of death and pay off any remaining balances.

    Bank - Arrange to change any joint accounts or to open an account in your name. Do not close any accounts right away!

    Although this list is a good starting point; a complete list of people to call and things to do will depend on where the deceased lived and the details of their estate. Contact your loved one’s estate planning attorney (or your own) to ensure that nothing is left to chance.