Wednesday, October 26, 2016

Probate or Non-Probate Assets? Both May Be Included in an Estate

The executor of an estate has to write up an inventory listing all of the assets she’s dealing with in settling that person’s affairs. But that list does not necessarily include all the assets the person owned before death.  The executor is responsible for accounting for probate assets only, Alexander A. Bove, Jr., explains in The Complete Book of Wills, Estates & Trusts.

What assets are not probate assets?
  • Jointly held assets
  • Insurance proceeds payable to named beneficiaries (not to the estate itself)
  • Retirementy plans and annuities payable to named beneficiaries (not the estate itself)
  • Assets held in a trust
Remember, it is only probate property that is disposed of through a will.  In the case of jointly held assets, ownership passes automatically to the survivor.  Trusts and insurance policies typically designate who the inheritor will be, so no “settlement” process is needed.  Even if the asset is disposed of by reference in the will, if it is held jointly, title will trump the provisions of the will.

Can life insurance ever be a probate asset? Yes, Bove explains, offering two examples:
  • A life insurance policy was made payable to the estate
  • The deceased was the owner of a life insurance on someone else’s life, and that person is still living
So, if only probate property is disposed of through a will, can you plan your estate in such a way as to leave only non-probate assets?  And, if you did, of what use would a will be?
A will can have several uses, Bove points out, even if you’ve arranged to leave only non-probate assets:
  • Naming a guardian for minor children and for their assets, including given specific instructions to the guardian
  • Naming an executor for the estate
  • Authorizing an executor to carry on your business
  • Detailing your wishes for funeral arrangements
Whether assets are probate or non-probate determines whether they will be disposed of through the will.  But whether or not there is a will is a matter of which wishes it’s important to you to make known.

“In short”, Bove says, summing up the topic, “There are many things you can do, some things you may do, and a few that you must do – and can only do – in your will.”

- By Ronnie of the Rebecca W. Geyer blog team

Wednesday, October 19, 2016

"Not So Fast!" is the Court's Message to Heirs

“The administration of an estate operates on the same principle that applied while the testator was alive: A person must first attend to his owns debts and expenses before he can give away what is left,” Alexander A. Bove, Jr., explains in The Complete Book of Wills, Estates & Trusts.

In other words, as we often explain to heirs of an estate, beneficiaries can take only what is left after the debts and expenses of the estate have been paid.

Of course, any assets (such as real estate) that have a mortgage will use the value of the asset itself to pay off the lien. But, for estate assets other than mortgaged property, the priority of paying expenses is as follows:
  1. Funeral expenses
  2. Administrative expenses (executor and attorney’s fees)
  3. Taxes (federal and state estate and income tax)
  4. Final illness expenses and all other debts
Only after these debts have been satisfied, can the distribution of inheritances happen.

Funeral expenses were put as #1 for a reason – there is an urgent need to dispose of the body with dignity. But these expenses must be reasonable in proportion to the entire estate.  Who decides on the reasonableness? Ultimately, the probate court. (Since the burial often takes place right after death and long before the will is probated, Bove explains, creditors would need to act quickly to challenge funeral expenses as excessive.)

Assuming there is plenty of money in the estate to cover all these costs, the question then is, which assets within the estate should be used to pay those expenses?  The answer is that they are paid out of the “residuary estate”, meaning cash and liquid assets not specifically designated to be given to named beneficiaries.  After the personal property is used, only then would real property be sold and the proceeds used to pay expenses.

In the meanwhile, as all the estate’s debts and expenses are being discovered and paid, what do you do with the estate’s money?  Should it be invested?  Should existing securities be sold?  At the very least, Bove advises, any cash or liquid funds should be deposited into interest-bearing bank accounts.  The executor’s first consideration must be the protection of principal.
- by  Rebecca W. Geyer & Associates

Tuesday, October 18, 2016

To Insure or Not to Insure - That is the Questiion

Long term care is generally defined as hands-on assistance provided for an extended period of time to people who can’t take care of themselves due to a prolonged disability, illness or cognitive impairment such as Alzheimer’s disease,” AARP explains.

As elder law attorneys, needless to say, we find ourselves talking to individuals and their family members about long term care – and about its increasingly high cost. Since most seniors will require some form of long term care before death, we’re keenly aware that financial devastation can result for families who are unprepared.

When do you qualify for long term care? When a physician or other health professional certifies that you are unable to independently perform at least two Activities of Daily Living, which include:
  1. Bathing
  2. Dressing
  3. Eating
  4. Transferring (walking)
  5. Toileting (bathing and showering)
  6. Continence
Where are long term care services delivered?
  • Home care
  • Adult day care
  • Residential care in an assisted living facility
  • Residential care in a nursing home

The myth about Medicare and long term care:
Contrary to common belief, AARP explains, Medicare and other health insurance policies do not cover the cost of long term care, because that is not considered a medical expense. "Medicare will only cover skilled nursing care and therapy services following a three day in-patient hospital stay.”

The dilemma faced by the average consumer:
Not only is the cost of long term care insurance steep, the “landscape is confusing, unpredictable, and unclearly regulated,” AARP comments, going on to caution investors not to overlook reality:
  • Even if you’re lucky enough to have family members willing to care for you, they may lack proximity, time, technical expertise, or adequate health or strength of their own.
  • “Self-insuring’ through investments may not work if portfolio returns fail to keep pace with healthcare inflation. And, should an earlier-than-anticipated need arise, a Long Term Care Insurance policy takes effect immediately.
Clues to keeping long term care insurance affordable:

“If you do buy a policy, your goal is to maximize your benefits while minimizing your cost,” AARP advises, offering the following “smart buyer” tips:
  • Make sure you buy a policy that covers the types of facilities, programs and services you want and which are available in your area.
  • Make trade-offs to make the premium more affordable, including choosing a longer elimination or waiting period before coverage kicks in. (Do, however, include inflation protection, AARP advises.)
Use legal guidance to deal with issues related to long term care:
  • Veterans Aid and Attendance
  • Medicaid eligibility
  • Special Needs Planning
Long term care planning is just one part of planning for the issues faced by elders and their families. Careful planning helps protect the people most important to you and the assets they have worked a lifetime to achieve.

- by Cory Judd of Rebecca W. Geyer & Associates

Wednesday, October 5, 2016

2016 Law Helps Address the 10 Reasons Families Fight About Senior Care

Jeff Anderson, writing in, lists ten reasons families members have tended to fight among themselves about senior care issues:
  1. Siblings view parents’ needs differently
  2. Parents resist care
  3. Family members regress to earlier roles and past issues resurface
  4. One child does all the “heavy lifting”
  5. One child in control excludes others from decision making
  6. Siblings disagree on how to pay for senior care
  7. Children must often balance caregiving with raising a family
  8. When both parents need care, the physical and financial strain is immense
  9. Siblings differ on the nature of end of life care
  10. Siblings disagree on inheritances
While family dynamics will continue to be complex and delicate, Indiana’s new CARE Act, a law that went into effect January 1 of this year, can help ease part of the stress by providing advice and help to the more than a million and a half Hoosiers who care for loved ones. The goal of the law is to improve coordination and communication between family caregivers, patients, and hospitals and rehabilitation facilities.

Since the plan of care itself is not left up to the Lay Caregiver, but developed by a nurse, social worker, or licensed healthcare professional, there is less room for disagreement about the best way to help senior at home with:
  • Daily activities
  • Wound care
  • Administering medication
  • Operating medical equipment
“Know that you are not alone,” says the Care For the Family Caregiver: A Place to Start website. “Although you may feel isolated, together, family caregivers are part of a larger community.” Family caregivers are responsible for the physical, emotional, and often financial support of another person who is unable to care for him/herself due to illness, injury, or disability, explains.

Elder law involves planning for the complex health, long-term care, and other issues faced by elderly and disabled individuals and their families. Advance directives are written instruments that give others advance instructions or “directives” on how to manage your health care and finances should you become incapacitated.  

Proper estate planning includes the use of a power of attorney, an appointment of health care representative and a living will or life prolonging procedures declaration. Indiana’s CARE Act now becomes the newest tool to help parents and children avoid fighting and begin care-filled helping.

 - by  Rebecca W. Geyer