Wednesday, October 18, 2017

Why Health Savings Accounts Can Be Significant in Retirement Planning

“While retirement planning and estate planning are linked, you need to prioritize for everyone to benefit,” explains. If you don’t put retirement first, you risk becoming a burden to your children, yet at the same time you wish to secure the future of your descendants. In between the two, though, is one people of the sequence that calls “the pothole”, which is end-of-life medical care costs.
At Geyer Law, we absolutely agree with New England attorney Jules Martin Hass that the cost of living for those who need end of life care is extraordinarily high. With only four basic ways to pay for care, including paying out-of-pocket, long term care insurance, Medicare and Medicaid, even for those who were financially secure throughout their lifetime, medical costs can “feel like insurmountable financial challenges”.

With proper Medicaid planning by an experienced advisor, families can ensure that all of their assets are not lost to a nursing home, and much of our efforts on behalf of retired clients with children is devoted to this area of planning.

Ed Slott, writing in Financial Planning Magazine, suggests planners explore an additional, lesser known avenue of planning to help their clients arm themselves against “the pothole” between retirement and death: Health Savings Accounts.

“A large percentage of many retirees’ savings will go towards health care costs,” Slott points out, and an HSA can be a valuable tool to pay for these expenses. “Most clients with HSAs use them inefficiently,” Slott claims.  Whenever they have a qualified medical expense, their first thought is to turn to the HSA . “In the process,” he explains, “they lose out on the opportunity of tax-deferred growth and perhaps more important, they lose out on potentially larger tax-free distributons in retirement.” For clients 65 and older, HSA distributions are no longer subject to penalty.

While retirement planning and estate planning are linked, the attorneys at our Indiana estate planning firm realize the neither one of these can be secure unless clients prepare to avoid “the pothole” of end-of-life medical costs!
by Ronnie of the Rebecca W. Geyer blog team

Wednesday, October 11, 2017

Why Your Doctors Are Part of Your Estate Planning Team

“If you are to get the medical care you need,” cautions Tim Prosch in the book The Other Talk, ” you and your family will need to learn how to take control of your healthcare.”

At Geyer law, we convey the same message to our estate planning clients. Appointing someone to be your medical advocate or healthcare power of attorney is literally just the first step, because, just as Prosch warns, that representative may someday be called upon to coordinate various doctors and specialists on your behalf, find and organize medical records, deal with diagnoses, even negotiate with insurance companies.

Once you’ve determined which child or other relative would be the best candidate for your medical power of attorney (someone who is emotionally strong and a good communicator, plus has the time available to devote to the task), you must begin the task of organizing your medical history. In addition to the legal documentation, your folder must include:
  • A list of doctors and medical providers (names and contact information, medical specialty, and a brief description of what treatment plan each recommended for you)
  • A list of medications (name, strength, how often you are taking them, who prescribes the medication, where the prescription is filled).
  • Medical insurance information – policy numbers and contact information
Prosch recommends building a medical family history. “The purpose,” he says, “is to create an understanding of potential risk factors by linking family genes to predisposition for many chronic illnesses.”  Rather than creating fear, he explains, such a history allows you to be proactive for preventable diseases so you can be on the lookout for early symptoms.

Having your medical representative participate in doctor visits, possibly via conference call or Skype, would be good practice, Prosch suggests.

We agree.  The goal of our attorneys at Geyer Law, regardless of your financial status, is to help you accomplish your objectives and provide for your family in the best way possible.  We believe assembling your estate planning team, including your medical advisors, is a path to peace of mind.

- by Rebecca W. Geyer

Wednesday, October 4, 2017

How Life Partners Can Inadvertently Disinherit Each Other

“You have to be vigilant to make sure assets will pass to the other when one of you dies,” Marcia Passos Duffy writes in, referring to unmarried couples living together. “When life partners don’t tie the knot,” Duffy adds, “they don’t enjoy the financial advantages that come with marriage.”
  • Name each other as beneficiaries on pensions, retirement accounts, and insurance policies. Qualified plans must now provide survivor benefits to same-sex spouses.  But some retirement and pension accounts have different rules about naming non-family beneficiaries.
  • Prepare wills. Otherwise, assets can pass, by default to a blood family member under intestacy laws of your state of residence.
  • Be careful about the titling of the home. If both partners have contributed equally, title the home in both names as joint tenants with right of survivorship; if only one partner has bought the home, use your will or possibly a revocable living trust to ensure that the surviving partner can remain in the home.
  • Name each other in durable power of attorney and healthcare power of attorney documents and visitation authorizations. A life partner could be shut out of end-of-life decisions if he or she is not designated as an agent to act on your behalf.
  • Prepare guardianship arrangements. If there are children involved and the couple wants the survivor to have full legal parental rights, guardianship language in a will is necessary.  This is especially true in a same-sex relationship if one party has no blood relationship with the child and such party has not legally adopted the child. The person listed as guardian in the parent’s will is given the first priority in determining who should be the child’s guardian under Indiana law.
  • Prepare a domestic partnership agreement. This is similar to a pre-nuptial agreement used by traditional couples, setting up a process for dividing property in the event of a separation or end to the relationship.

At Geyer Law, our attorneys often explain that estate planning “tools” generally fall into two categories: lifetime documents governing events during life, and post-life documents governing what happens after death. At our Indianapolis estate planning and elder law firm, we know that people face changing circumstances and make ongoing decisions that have legal ramifications. We serve as a resource to clients, combining clear and concise legal recommendations with responsiveness and compassion.

Given proper preparation and legal guidance, it should never happen that life partners inadvertently disinherit each other!
- by Rebecca W. Geyer

Wednesday, September 27, 2017

Does Indiana Law Require Filial Support?

May an adult child be found financially responsible for a parent’s long term medical care?

Back in the 1500’s, under English law, a child had a duty to contribute to the cost of a parent’s care, if parents lacked the ability to care for themselves. Does that principle still govern today?
That’s a question that has been a topic of discussion among elder law attorneys recently, as a recent article in the Indiana Lawyer explains. Two apparently contradictory legal facts are at play:
  1. The Federal Nursing Home Reform Act prohibits nursing homes from requiring a third party to sign or to be personally responsible for a resident’s expenses, or to payment as a condition of admission.
  2. Indiana is one of 30 states with their own filial responsibility laws requiring adult children to financially support their parents if they are not able to take care of themselves.
For filial responsibility laws to apply, explains, the following criteria would need to be met:
  • The parent must be accepting financial support from the state government
  • The parent has a medical or nursing home bill which they cannot pay (the bill was acquired in that state)
  • The parent is considered indigent (cost of care exceeds their Social Security benefits)
  • The parent does not qualify for Medicaid
  • The caregiver has reason to believe the patient’s child has the money to pay the bill and sues that child
There have been very few instances in which forced filial support has been imposed by an Indiana court. On the other hand, as we caution Geyer Law clients, Federal and state laws permit Medicaid to seek reimbursement from recipients’ estates. As elder law attorneys, we want to help children of elderly parents make sure their parents are as well cared for as possible. In our planning, we utilize many tools, including:
  • Long term care insurance
  • Gifting
  • Trusts
  • Spend-down
  • Annuities
  • Promissory notes
With proper Medicaid planning, families can ensure that their assets are passed on to the next generation, while at the same time avoiding lawsuits based on filial responsibility laws.

- by Rebecca W. Geyer

Wednesday, September 20, 2017

How-Not-To Estate Planning Lessons From Dead Celebs

“Dying without a will doesn’t damage the deceased, but it sure makes it hard on the survivors,” observed John J. Scroggin, J.S., LL.M., AEP at a regional symposium of the Financial Planning Association, citing some notable examples:

(1865)  Abraham Lincoln died without a will despite being a skilled attorney. Lincoln left an
             estate of $110,000, the equivalent of several million dollars today.

(1973)  Pablo Picasso died without a will, leaving an estate of 45,000 pieces of artwork, five
             homes, gold, and bonds worth $30 million.

(1998) Sony Bono dies while skiing with estate between $1 and $15 million.

(2009) NFL quarterback Steve McNair was murdered, leaving behind a $20 million estate, but
            no will. Under Tennessee intestate law, his surviving wife received only 40% of the estate.

According to AARP, only 17% of Americans over the age of 50 have wills and durable powers of attorney.

At the opposite extreme, Scroggins explains, are celebrities who did create estate planning documents, but who failed to contemplate the unexpected. Again, Scroggins offers a couple of notable examples:
  • The Jimi Hendrix estate passed entirely to his father.  The father later passed the assets on to his adopted daughter, disinheriting Jim Hendrix’s full blood brother.
  • Jacqueline Kennedy provided that the residue of her estate (valued at between $43 and $100 million) would pass to her children. Or, if the children signed a disclaimer, the assets would go to a Charitable Lead Trust for her grandchildren.  The CLT was never formed. (Apparently the children chose to pay the estate tax rather than pass assets to the grandchildren!)
“The unfortunate reality is that like ‘regular’ people, many celebrities do not know how to properly handle their finances,” Scroggins concludes.

So, what causes this broad based resistance to signing a will and preparing estate planning documents? Scroggins posits that it is people’s fear of addressing their personal mortality, coupled with the “inability of the attorney to communicate with the client… the necessity, purpose, and impact of proposed documents.”

That is precisely why our mission statement declares:“We are a resource for clients, combining clear and concise legal recommendations with responsiveness and compassion to create a solution to best meet your needs.”

- by Rebecca W. Geyer

Wednesday, September 13, 2017

The IRA That Doesn't Care How Old You Are

As long as you have earned compensation, whether it is a regular paycheck or 1099 income for contract work, you can contribute to a Roth IRA – no matter how old you are, Fidelity reminds investors. 2017 Roth contribution limits are $5,500 for those under age 50, $6,500 for aged 50 or older. There’s one important note, though: although age doesn’t matter, income does, and the IRS sets income limits for eligibility to contribute to a Roth (in 2017, $132,000 for a single filer, $194,000 for married person filing jointly).

But don’t give up just yet, Fidelity says. Even if your earnings turn out to be over the limits, you can still take advantage of the Roth by converting money from a traditional IRA or 401(k) into a Roth.

And, while at Geyer Law we offer neither tax nor investment advice, we believe Roth IRAs definitely deserve a place in estate planning discussions, for a variety of important reasons:
  • Earnings in a Roth IRA are tax free.
  • You may contribute to a Roth even if you have a 401(k) or 403(b) account.
  • Withdrawals are never required.
  • After age 59 ½, you do not pay tax on “qualified withdrawals” (the account was opened more than five years ago or the balance is being paid to a beneficiary after your death).
Having a Roth IRA allows you to offer some tax planning advantages to your beneficiaries, as well as to benefit certain ones outside of your will and trust:
  • When you die, while your Roth account may be subject to estate tax, your beneficiaries will not pay any income tax on the distributions.
  • Note that the beneficiary designation on your Roth IRA account is going to supersede anything in your will or trust (meaning the Roth planning needs to be coordinated with your overall estate plan).
  • Your beneficiaries have the choice of rolling over the money into an inherited Roth IRA. The assets would continue to grow non-taxed but distributions are required. (The heir would name his or her own beneficiaries for the new account).
  • By Dec. 31 following your death, the beneficiary would need to begin taking withdrawals based on his/her life expectancy. If you had named more than one beneficiary, the oldest beneficiary’s life expectancy would be used in the calculations.
As MarketWatch.com reminds readers, it’s important to make sure beneficiary designations on all accounts reflect the IRA owner’s wishes, adding that “Many attorneys prepare customized beneficiary designations.”

The Roth may in fact be the only IRA that “doesn’t care how old you are” when it comes to contributing. On the other hand, as we well know at Geyer Law, reaping all the Roth’s tax and estate planning benefits takes careful and thoughtful planning and legal expertise.
- by Ronnie of the Rebecca W. Geyer blog team

Wednesday, September 6, 2017

After You're Gone, Will Your Disabled Child Be Under the Arc?

If you have a child or other loved one with a physical or mental disability, a special needs trust may be a critical piece of your estate plan. In fact, here at Geyer & Associates, an estate planning and elder law firm, we support parents of special needs children by:
  • helping them navigate through the complexities of federal and state laws
  • connecting them with resources
One of the biggest concerns parents have, we’ve found, is providing for a disabled child after they themselves are gone. A special needs trust is designed to accomplish four basic things:
  1. Setting out specific directives about the care of your child
  2. Providing for “extras” above and beyond governmental benefits (vacations, electronics, entertainment, special dietary needs, education expenses, even gifts for others)
  3. Protecting your child’s inheritance
  4. Preserving governmental benefits such as SSI and Medicaid.
We often help parents or grandparents set up individual special needs trusts, but also recommend they explore becoming part of a very large pooled trust at the Arc of Indiana. Trust I under the Arc uses an annual spending projection to decide how much money may be spent each year on the beneficiary. The Arc trust is designed to be “self-depleting”, designed to be used up by the time the beneficiary passes away.

Why consider a special needs trust through the Arc? The Arc website lists several important considerations:

  • With an Arc trust, should your child outlive his or her projected life span, the trust will continue making disbursements even though the account is depleted. Those funds come from donations of funds remaining after other beneficiaries died. With a bank trust, if the funds are insufficient to cover the trustee’s fees, the trust might be terminated.
  • Many banks are reluctant to administer small trusts.  The Arc master Trust minimum funding is $30,000.
  • The Arc membership and Board of Directors is comprised of people who routinely interact with people with disabilities and are therefore in a position to be more sensitive to parents’ desires for special needs children.
After you’re gone, will your child be under the Arc?

- by Rebecca W. Geyer