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Do You Need a Trust?

This question is by far the most asked question that we receive in our office. However, there is absolutely no standard or right answer for everyone. Trusts are typically used for either probate avoidance purposes, tax avoidance purposes, or asset protection. Trusts are often used for disability planning but generally, that is not the sole reason for people’s use of trusts.

Currently, the federal estate tax limit provides an $11.7 million exemption per person. This means that an individual currently will not pay federal estate tax unless their estate, per person, goes over $11.7 million or $23.4 million for a husband and wife. This law is set to go back to $5 million in 2025, set for inflation which predictions are that it will end up being around $5.8 million. Even with the reduction in 2025, most people in our local community will not need to do a trust for tax purposes. Certainly, there are rumors each and every day about Congress changing the laws and lowering the exception amounts, but until that happens, I would not make plans for something that may or may not occur. History tells us that all of the rumors that we are hearing, probably none of them will actually look like the actual law if it is ever enacted, and we have always taken the position to plan for the law as it is in effect, and if and when it changes, then we can pivot. With that said, there is not a high percentage of people who will need to do trusts for tax purposes as we sit here today in May of 2021.

Probate avoidance is usually a situation where there are properties in several different states across the country. While every state has different laws as to whether a person needs to open an estate in their specific state, generally speaking, if the property is in a person’s name alone at the time of their death, the state will require them to go through that state’s probate process. We find that many people like to avoid probate in these situations so that they do not have to hire attorneys in each state to finalize for their families. In a situation where a family does not have properties in multiple states, generally, probate avoidance is not something that people are overly concerned about unless they’re in a state that the probate process is very burdensome and overwhelming, which currently, it does not happen to be in the Commonwealth of Pennsylvania.

Asset protection is one reason that people will often do trusts in the Commonwealth of Pennsylvania, to avoid potential creditor issues and long-term care costs. These are a very specific animal of trusts and the rules are very unique to these trusts alone since they are not being set up for tax purposes. It is our recommendation that you speak to a professional well-versed in these types of trusts before completing one. They are very unique and there are very simple rules; however, it is very easy to make mistakes in this area. An elder law attorney well versed in these types of trusts will be able to provide advice as to whether this type of trust makes sense for you. There is no one size fits all answer to the question of “do I need a trust?”. It is important to get very clear on your personal goals and what your goals are for your family. Once you have a very clear picture of that, then a professional will be able to advise you, based upon your current situation, as to whether it makes sense. We would certainly be honored to assist you through this process, and we offer weekly workshops which will give you insight into the thought process in regards to whether trust is right for you. We look forward to seeing you in the future.

If you are looking for advice in regards to estate planning, please call our office at 717-845-5390 or click the link here and we will contact you.

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What is the difference between a living will and a healthcare power of attorney?

This is the question that I receive at least once a week in my estate planning and elder law practice.  Taken together, a Living Will and a Healthcare Power of Attorney, are an Advanced Healthcare Directive.  Taken individually a Healthcare Power of Attorney allows an individual to make healthcare decisions on another person’s behalf.  A Living Will is a document that only kicks in when a person is “end-stage medical” which means that two qualified physicians have put in writing that the individual has no realistic hope of recovery.  That they will always remain permanently unconscious, vegetative, comatose, and/or terminally ill.  If the document has both of these items in them together, then it is considered an Advanced Healthcare Directive.  

I am always urging people to ensure that they have these documents in place.  My main reason for feeling that way is that I believe that it is imperative to take the burden off a loved one, to spare them from having to “pull the plug” on their loved one.  My experience at my law practice is that when a person’s wishes are in writing regarding what they want or do not want should something to happen, that others are much more comfortable in allowing that decision to stand if they don’t personally have to make it. 

 I remember several years ago a spouse who recently lost her husband came into my office sobbing because her husband did not have an Advanced Healthcare Directive and she did not know exactly what he wanted.  I reminded her that he repeated numerous times in my office in front of her that he did not want to live that way, and that if there is no hope there is no reason to live.  However, all that she could know or remember is that she pulled the plug.  She conveniently did not remember all of those conversations because, in her mind, she told the doctor to pull the plug, and within seven minutes her husband was no longer with her.  There was absolutely no consoling or helping her feel better about her choice.  And, although I am 100% confident she did exactly what her husband wanted because she was the one who had to make the decision she always wonders and always regretted it.  Putting your wishes in writing will allow your family members to be 100% certain that they were your wishes and that they are merely following through on what you wanted, not what they think you want, or making them play “God”.  It is imperative that everyone over the age of 18 have a Healthcare Power of Attorney as well as a Living Will.  

If we can be of any assistance or answer any questions while you make decisions about yourself and your family, please give us a call at 717-845-5390 or click the link here and we will contact you.

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With premiums increasing drastically, should I keep my long-term care insurance?

This is a question that I receive on a regular basis in my estate planning and elder law practice. By way of full disclosure, I am not a licensed insurance agent and I am not licensed to be able to sell long-term care insurance or any other insurance product. I am an attorney with approximately 20 years of experience in estate planning and elder law and I happen to be a Certified Elder Law Attorney under the authorization of the Pennsylvania Supreme Court. While I am not the person who will sell the products, I am certainly an individual who has been advising numerous clients over the years and definitely believe in the benefits of a long-term care policy and what they can provide. We have done numerous other logs about long-term care insurance and the benefits of said policies.

When long-term care insurance first gained popularity, many companies completely missed out on the actuarial tables and in predicting what people were going to need. Because of this drastic miscalculation, most of the companies who originally were in the markets for long-term care insurance are no longer there. The few standing companies that are left are trying to figure out ways to make up for the mistakes of the past. Because of that, they are often forced to increase premiums and decrease benefits. Although these companies do have to get permission from the insurance board, it is not a very difficult proposition and in most cases, they will almost always be able to receive permission. The most difficult part is that individuals have been paying into a plan for a number of years and now are learning that they’re going to have to decrease their benefits and even then they may have to increase the premiums that they are paying. It is heart-wrenching to have to provide guidance in these situations and ultimately I always encourage them to bring in their financial professionals to try to make the decisions.  This is as much about the numbers and common sense as it is about the emotion involved. This becomes very easy for us to get disgusted and upset about what is occurring, but it is a cold, harsh reality of the miscalculations that were made in the past.  In some instances increasing premiums and decreasing benefits is the only way some of these companies will survive. 

My best advice to any and all people who are faced with this dilemma is to write out the pros and cons and to try to make the evaluation and determination about numbers and as little as possible about the emotion of the situation. It is too easy to get hung up on the principle of the manner, but the truth is principals are expensive and cause wars. Make the best decision for you and your family based upon the information that you have in front of you. Long-term care is not going away and dropping the policy out of spite is not going to help anyone. 

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The Talk

No, we are not talking about the birds and the bees and how to have a conversation with your young son or daughter.  We are talking about the conversation with your parents as they age and what are their wishes in regards to caregiving, long-term care, death, and the planning associated with it.  Most families shy away from these conversations and essentially treat them as faux pas conversations and avoid them at all costs. While avoiding the conversation can make it seem like it’s going away and make it seem like everything is okay inevitably that decision will blow up and will become a very painful situation for those involved.

 

As an estate planning and elder law attorney, I cannot begin to tell you how many families avoided this conversation with their parents and regretted it later.  I have never had a family come back to me after I have suggested that they sit down and have “The Talk” and told me that they regretted it and wished they would’ve waited.  They all say that it was great to get everything out on the table.  

 

Most parents don’t talk about it with their children mainly because they don’t think that their children want to discuss it.  We often hear parents saying that my kid clams up or my kid gets very nervous and just doesn’t want to talk about me or my spouse dying.  Therefore it’s easier just not to have the conversation.  Believe it or not, most parents are open to having the conversation because they are dealing with it on a daily basis and they understand that it’s better to have the conversation or at least to think about it ahead of time.

 

Our advice is to try to start the conversation to understand what your parent’s wishes are for their golden years. Where do they want to live as they age?  Do they have an idea as to how they would like to be treated if they were ever to be in an end-of-life situation?  Where would they like to be buried?  Do they have their financial affairs in order and do they have professionals that they are working with that you could contact if something happened to them?  What is going to happen when if they have to go into a nursing home how can you assist them with their planning?  What happens when they die?

 

These are often great conversation starters.  An estate planning and elder law attorney could also assist you with filling in the details and understanding how to put these answers in legal documents to make them binding in the future.  Don’t underestimate having your parents go to a workshop on estate planning and elder law, it will get them thinking and may also provide the opportunity for the conversation to occur.

 

The holidays and times that families together often end up being the time that people get to discuss these topics and we encourage that you have “The Talk” not only for your parents but for you and your family as well.  As much as your parents will thank you for wanting to have the discussion to figure all of the information out you will also be relieved to know that they have thought a lot about it and have a lot of strong opinions and beliefs and now you know that you can carry out their wishes.  One thing that I have found is that people always want to do what’s best for mom and dad and oftentimes want to do what mom and dad intended.  If you have had the conversation and have documents in place everyone will be on the same page and no one has to speculate or argue about what was intended.

If you are interested in learning more about Medicaid crisis planning, please call our office at 717-845-5390, or click here to RSVP to our upcoming workshops.

 

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To Marry Or Not To Marry, But To Plan Accordingly Either Way / York, PA

Happy-old-coupleLawyers urge unmarried clients to draw up agreements specifying which partner is responsible for expenses and who will inherit assets. Many couples ignore the advice and share expenses informally. But the loose arrangements can result in messy legal problems if the couple splits or one partner dies suddenly.

It has been said that marriage is a young persons’ game, but love isn’t. These days, more and more Americans are meeting new loves or (finally) their true loves later in life. These later-in-life marriages can be tricky. On the other hand, even if you leave marriage to the young and idealistic, there is some planning that really has to be in place.

The sociology of later-in-life marriage is fascinating, both in thinking about the recent jump in numbers and the more recent decrease. Either with or without tying the knot it is also a practical issue with legal ramifications, and for those later-in-life loves not destined for marriage there is some practical advice to be gleaned in a recent article on the subject in The New York Times titled “Welcoming Love at an Older Age, but Not Necessarily Marriage.

The article has the voice of several experts and more than a few horror stories to share. You see, marriage is an emotional union, but it is also an economic and legal one. This may come far more naturally to 20-somethings than boomers. It seems the older you get the more you have and the more you have to think about.

If you are to marry, then the separate pasts, lives, and families have to account for it all and mesh together, which is a tricky enterprise when everything from college financial aid for children/grandchildren to Medicare or Medicaid benefits may instantly be affected.

To not marry doesn’t necessarily make all of those issues go away, but it might add new ones. For example, how will you legally care for one another and how will you own assets like the home. And of course, there is always the possibility of a split – even this late in life – and the question then of how protected your assets comes to the forefront.

Do take a look at the original article, especially if marriage is not the end-goal, and be sure to structure this new stage in life so that it might also be a happy one.

For more information about planning accordingly, please visit my estate planning website.

Reference: The New York Times (April 25, 2014) “Welcoming Love at an Older Age, but Not Necessarily Marriage

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