Articles

I Get by With a Little Help:
Caregiving With Peace of Mind

As the US population ages, we focus more on the millions who will need care — or already do. But what about the caregivers at their sides?

A November 2009 study by the AARP and NAC (National Alliance for Caregiving) says more than 28 percent of Americans served as unpaid caregivers last year. The job comes with heavy responsibility and much stress. The average caregiver works 20.4 hours per week caring for a loved one (and 13 percent spend more than 40 hours per week).

Considering the time and emotional stress that goes into caregiving, it's no surprise that 17 percent of those who take care of a loved one reported a decline in their own health as a result of their role. Linda Nelson, a professional care manager for Creative Care Consultants, thinks that those looking after a loved one can take too much on themselves. "Balance is the key word," Nelson says, "and it's hard for people to do that. There has to be a balance so your whole life isn't caregiving." Finding balance usually means finding help. As elder law attorneys, Berger Law Firm, P.A. takes a holistic approach to helping families through tough times. Caregivers must care for their loved ones, but they also deal with finances and sometimes family discord. With direction, these responsibilities can be made less onerous. Communication and involving an objective third party, such as an elder law attorney, often alleviate the pressure.

After 25 years in the Kansas City area, we know nursing homes and geriatric care providers and can make recommendations. We can also provide direction on how to compensate the caregiver without jeopardizing Medicaid eligibility. If you are a caregiver, lean on us before you burn out.

Understanding Health Care Directives

Regardless of the severity of the situation, patients are often asked about health care
directives. Admission to a hospital or nursing home brings up questions.

Living wills, health care powers of attorney and DNRs are types of advance directives, each designed to operate in different situations. These documents state a person's wishes regarding future health care decisions in case he is not competent or conscious to do so himself/herself. At Berger Law Firm, P.A., living wills and health care powers of attorney are typically prepared as part of an all-encompassing estate plan.

A living will states the individual's preferences regarding treatment choices, including withholding or removal of life sustaining treatment should the individual fall terminally ill or into a vegetative state. A living will does not give the decision to someone else. It simply states the patient's wishes.

When a person signs a health care power of attorney, he is appointing an advocate who can oversee his care. That advocate can demand information, seek other medical opinions and insist that the person's wishes be followed.

Do not resuscitate (DNR) orders must be written by a health care professional. DNRs direct medical professionals to withhold cardiopulmonary resuscitation (CPR) in the event of cardiac or respiratory arrest. It does not apply to the withholding of other life sustaining measures, such as removal from life support.

Executed copies of these documents should be provided to your doctor and the person named to act on your behalf. They should not be stored in a safe deposit box as they need to be accessible in an emergency.

Providing that he or she is competent, a patient can revoke or modify an advance directive at any time. Advance directives enable someone you choose to be your voice during a stressful time when you are not competent or conscious to personlly dicate your instructions. Without them, a court might be required to make these decisions for you.

No Estate Tax in 2010 (But Watch Out For 2011!)

The new year delivered a new set of tax laws to the estate planning profession. It's true: there is no federal estate tax for those dying in 2010. Instead, Congress has devised a different method of collecting taxes upon death. It will do so through capital gains taxes.

In the past when the estate tax was imposed, the beneficiaries of a decedent's estate would get a step up in basis of the inherited property to the date-of-death value. If the beneficiary sold the property, he/she would have to pay capital gains taxes on the growth from the date of death. Now there is no automatic step up in basis. To ease the harshness of the loss in the step up in basis, each estate is given a $1.3 million basis increase. An additional $3 million basis increase is allowed for property acquired by the surviving spouse.

A good standard practice by estate planning attorneys has been to include a formula clause in the will or trust that allocates assets in such a manner that maximizes the use of the estate tax exemption and unlimited marital deduction, thereby minimizing the taxable estate. Now that there is no estate tax, these formula clauses may have an adverse effect on a surviving spouse. If your estate plan contains such a formula clause, the intended result of providing for a surviving spouse can be achieved with an estate plan amendment.

This vacation from estate taxes only lasts until 2011. If Congress does not reform estate taxes, the rules revert to those in effect prior to EGTRRA 2001. This means the estates of decedents dying after December 31, 2010 would have a $1 million unified credit exemption with graduated estate tax rates from 41 percent to 55 percent.

If your estate plan has provisions for a surviving spouse, call Berger Law Firm for an estate plan review to assure your intentions will be accomplished.

How to Rest in Peace

Recent headlines about prepaid funeral plans have many individuals questioning the financial security of such plans. In order to evaluate the security, one must understand how prepaid funeral plans operate.

Two general types of preplanning are involved in the funeral business: prearrangement and pre-payment. A prearranged funeral does not involve prepayment of funeral expenses, but provides for the arrangement of the details of the funeral service. These arrangements can be as general as picking the funeral home and type of service; to as detailed as selecting the casket and naming the pall bearers.

Preplanning can help avoid confusion and conflict during the grieving period. Prepaid or pre-need funeral plans involve advance payment of the funeral with the funeral home making a commitment to provide the agreed upon funeral services at a later date for a preset price. Prepaid plans are basically a hedge against inflation. Prepaid plans are either insurance funded or trust funded.

With insurance funded plans, an individual purchases a whole life insurance policy to cover the funeral costs. Most insurance funded funeral plans can be transferred to different funeral homes. These policies are usually sold by the funeral home and are only as secure as the insurance company issuing them. Because these are life insurance policies, the death benefit is usually backed to a certain limit by a state guaranty fund in the event the issuing company goes out of business.

Trust funded plans involve the funeral provider placing the purchasers funds into a trust account with a bank or trust company. The financial institution then invests the funds in savings accounts, certificates of deposit or other interest bearing accounts. Because the financial institution is federally insured, the funds are totally secure. If the funds are placed into an irrevocable funeral trust, the funds are designated for funeral expenses and cannot be spent otherwise. An advantage of an irrevocable trust is that the prepaid funeral plan will not be counted as an asset when applying for Medicaid. A disadvantage is that the grantor of the trust (purchaser of the plan) may owe tax on the income earned if they have enough taxable income to owe taxes.

Before purchasing a prepaid funeral plan, know how your funds will be invested. Will the funds be used to purchase insurance or put into a trust account? Either is fine, provided you understand the consequences of each.

A special thanks to Pat Schonacher of D.W. Newcomer's Sons for her assistance with this article.

Have You "Probate Proofed" Your Assets?

Avoid probate? We've learned that some things in life should be avoided, right? Probate basically means court intervention is required to transfer ownership of titled accounts, which can take time, add unnecessary legal costs and delay the final settlement of an estate.

Trust agreements, payable or transfer on death designations (P.O.D. or T.O.D.), joint tenancy and insurance beneficiary designations are a few "probate avoidance" techniques. In order to perform properly and achieve the intended outcome, asset titles and beneficiary designations should be reviewed periodically. Beneficiary designations are often placed on bank accounts, life insurance policies and savings plans, i.e., IRAs and 401(k) accounts, at the time the accounts are opened or the policies are taken out, and then they are forgotten. If the beneficiary is not living at the time of the account or policy holder's death, transferring ownership of the account may require court intervention. The same is true for joint tenancy and life insurance beneficiaries.

Before implementing "probate avoidance" techniques, the asset holder should understand the ramifications of his or her actions. Adding an individual as a joint owner of an account allows either owner access to the funds without consent from the other party (which could be cause for entirely different concerns). If the non-contributing party withdraws funds, such action would be considered a gift and may incur gift tax consequences. Removing the joint owner from the title requires consent from all parities. We have seen this lead to problems and litigation if all parties don't agree, such as if a person wants to remove an adult child, or niece or nephew from an account. Beneficiary designations may be easier to change and are not effective until death.

Taking time to review all of your beneficiary designations yearly is recommended to help you avoid probate (if that's your intention) and to make certain you know who has access to your assets. A review of your titled assets will determine if your estate is "Probate Proof".

The Brighter Side

These are difficult times. The "experts" now acknowledge that we are in a recession - and that we have been so for some time. Consumer confidence is low. As a result, many of us are concerned, wondering what planning we should do now, if any.

For many, planning is not discretionary. People have personal concerns that need to be addressed regardless of the economy. Maybe they have a blended family or a child with disabilities. Perhaps their spouse recently died and they now want to leave their estate to their children.

For anyone who may be subject to federal or state estate tax in the future, unusual circumstances have created perfect planning opportunities that will not last long.

In order to appreciate the current planning opportunities, it is helpful to understand where estate taxes are headed in the future. For 2009, the federal estate tax exemption is $3,500,000, with a top tax rate of 45% for amounts exceeding the exemption. In 2010, the federal estate tax goes away, but is then reinstated in 2011 with an exemption of $1,000,000 and a top tax rate of 55%. Estate tax change appears inevitable. During his campaign, President Obama indicated that he favors extending this years' $3.5 million exemption and 45% tax rate. No one knows what Congress and President Obama will agree to, but it is highly unlikely that the federal estate tax will be abolished.

This uncertainty reinforces the benefit to planning now. If you may be subject to estate tax, the current economic conditions create a unique opportunity for planning to help you meet your goals and objectives. Berger Law Firm, P.A. can help you determine if one or more of these strategies is appropriate for you under the circumstances.