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