Wednesday, September 28, 2016

Elder Law: Family Caregivers Advise, Record, and Enable

Until this year, Indiana was ranked at the bottom of all states for support of family caregivers, but the CARE Act, a law that went into effect January 1, 2016, now provides better assistance for the 1.3 million Hoosiers who care for loved ones. The acronym CARE stands for Caregiver Advise, Record, and Enable.

“Caregiving is a difficult task,” says Ambre Marr, AARP state legislative director, “and this new law helps caregivers be more engaged and informed. What we're trying to do is improve coordination and communication between family caregivers, their loved ones, who are the patients, and hospitals," Marr explains.

The three main benefits of the new legislation, as our attorneys often discuss with clients of Geyer Law, include:
  1. When a loved one is admitted for treatment to a hospital or rehab facility, the name of the family caregiver must be recorded.
  2. When the patient is discharged to either another facility or released to their home, the caregiver must be notified.
  3. The hospital or rehab facility must provide in-person (or recorded) instruction about the medical tasks the caregiver will need to provide.
Who can name a Lay Caregiver?  You or your health care representative may name a friend or family member as the caregiver. The three principles underlying the new law, Marr explains, are described on the information cards that AARP distributes:
  • Designation
  • Notification
  • Explanation
The plan for at-home care is not left up to the Lay Caregiver, but is developed by a nurse, social worker, or licensed healthcare professional. The plan will help the caregiver help the patient at home with:
  • Activities of daily living (dressing, bathing, moving from bed to chair and back, toileting, taking medications, food preparation, etc.)
  • Managing wound care
  • Administering medications
  • Operating equipment
Now that House Enrolled Act No. 1265 has been passed into law, appointing a Lay Caregiver becomes an important step in preparing an estate plan, not to be confused with the Healthcare Power of Attorney, which is a legal document authorizing someone to make decisions about your healthcare when you cannot.

The idea behind the Indiana CARE ACT is to ease a patient’s transition from hospital to home, helping caregivers provide assistance to friends or family members.

- by  Ronnie of the Rebecca W. Geyer & Associates blog team

Wednesday, September 21, 2016

Families Face End of Year Deadline for Business Transfers

Not every family member who owns a business intends to pass that business on to other family members.  But for high-net-worth families who are over the estate tax thresholds, just a few months remain to engage in transfer planning before some new, stricter, Treasury rules go into effect.
The new rules will be relevant only for individuals with a net worth of more than $5,450,000 ($10,900,000 for couples), whose estates would be subject to federal estate tax. Family business owners whose net worth falls below this threshold won’t need to be concerned.

For those for whom the clock is truly ticking, though, what is about to end are discounts for Family Limited Partnerships (FLPs) and family Limited Liability Companies (LLCs). Under current rules, discounts in estate tax may be claimed when business interests are transferred but the receiving family members do not possess full control over the interests they receive (in terms of voting or liquidation rights.

The lack of control, the logic is, leads to a lack of marketability for minority shares in the business. “If a family member, for example, wanted to sell his or her share in a partnership that was entirely owned by other family members, the pool of buyers might well be limited to his or her relatives.  They might not have the money – or desire – to buy him out,” observes Paul Sullivan, writing in the New York Times.

The marketability discount, which has often been as high as 40%, is about to end on December 1st of this year. Even worse, the new rules, if adopted, would impose a three-year “look-back”. That would limit deathbed transfers used to create a minority interest. It’s important to remember that the type of business transfer under discussion is irrevocable, taking place while the business owner is still alive. In fact, as estate planning attorneys, we often find ourselves emphasizing to clients that tax consequences should never be the “tail wagging the dog”.

The proposed Treasury Regulations are about to go through a ninety-day public comment period, followed by a public hearing in December, and final issuance wouldn’t take effect until 30 days later. Still, precisely because the timing is beyond families’ control, tax and estate planning for family businesses should be started now.

- by  Cory Judd of Rebecca W. Geyer & Associates

Wednesday, September 14, 2016

Help! I've Just Become an Heir!

“Contrary to popular belief, the estate attorney handling the estate represents only his or her client, who is the executor of that estate….” Therefore, he or she is under no obligation to provide advice to any of the heirs as to their legal rights, Inheritance Funding points out.

Ideally, before your benefactor passed away, he or she passed on wisdom about money management to you as a younger family member. But what if, for whatever reason, that didn’t happen? What do you do now?

Susan Johnston Taylor, writing in U.S. News & World Report, lists five inheritance mistakes for heirs to avoid: 
  • Spending money carelessly
  • Letting jealousy drive a rift in family relationships
  • Not getting expert advice from a qualified accountant and attorney
  • Losing other income sources (by being disqualified from government benefits)
  • Giving all the money to others
“If you get an inheritance and spend it right, it can definitely change your life and retirement for the better,” says Texas financial advisor Janet Briaud in Forbes. “The first thing to do if you get an inheritance is to step back and look at how it affects your personal balance sheet,” she adds.
Jean Setzfand, director of financial security for AARP suggests that, if you’re having or going to have a hard time making your income in retirement match your basic recurring expenses, you should consider using a portion of the inheritance to buy an immediate fixed annuity that pays you a set amount for life.

It’s fine to do what you think your folks would have wanted – as long as that’s what you want, too, and as long as it makes economic sense, observes Myra Salzer in “Living Richly”. At Geyer & Associates, we agree. And, while in many situations we are helping facilitate settlement and distribution of assets to heirs from an estate for which we helped plan, we’re also called upon by heirs who do not know where to begin. Our goals then become:
  • guiding those heirs through the process with sensitivity and empathy
  • helping heirs avoid those five inheritance mistakes!

- by Kimberly Lewis of  Rebecca W. Geyer & Associates

Wednesday, September 7, 2016

What-If Business Succession Strategies

“Indiana is a state where entrepreneurs see promising developments,” writes Adam Uziolko in Business News Daily. In fact, Indiana has more than 450,000 small businesses. Owners of closely held businesses have special needs.  The problem is, however, that too often business owners are so busy developing their business that they do not have time to address the legal issues necessary to ensure their continued success.

Nearly half of family owned businesses do not have a succession plan in place.  62% of owners surveyed said they have not made any provisions for dealing with a shareholder or key employee who becomes sick or dies. The results of that lack of planning are dramatic:
  • Only 30% of family owned businesses survive into the second generation.
  • Only 12% survive into the third generation.
At Geyer & Associates, we help clients address four basic business planning elements:

  1. Exit planning
  2. Business protection planning
  3. Business owner retirement planning
  4. Key employee planning
The main goal of the planning might be either to preserve the business or to prepare to transfer it with minimal disruption to operations.  A third very important goal might be to reduce or eliminate costly taxes.

Good “what-if” business succession planning often takes “a village”, and our attorneys at Rebecca W. Geyer & Associates work closely with insurance agents, tax professionals, and investment advisors to design a complete plan for each small business. 

“What-If” is the main question underlying a formal agreement called a buy-sell. There are three basic types of buy-sell agreements:
  1. Cross-purchase buy-sell - Each owner agrees to buy out the interest of any departing or deceased owner. To fund that purchase, each owner may buy and own a life insurance policy (and possibly also a disability insurance policy) on every other owner.
  2. Entity purchase buy-sell – The business itself redeems the interest of an owner in case of death, disability, or retirement.  Typically the business pays for, owns, and is the beneficiary of life and disability insurance policies on that owner.
  3. One Way – For one-owner businesses, the agreement is established between the owner and a key employee.

The agreement sets forth the triggering event purchase price and payment terms, while insurance provides the funds to carry out the agreement.

You might say a business buy-sell asks the tough what-ifs before those tough situations arise!

- by Corrina A. Judd of  Rebecca W. Geyer & Associates