The 2020 election is almost upon us. The recent past has taught us that trying to predict the results of an election can be futile at best. Still, our clients need timely counsel regarding their wealth management, and it is our role as advisors to keep them as informed as possible when it comes to potential tax changes on the horizon. While we do not know for sure what the future holds, we do have strong clues as to what the future tax laws may look like if the balance of power shifts in 2021 from Republican to Democratic hands.

Much of what we know about the potential tax landscape under a Democratic majority has been pieced together from reviewing campaign speeches and debates, observing interviews with candidates, and poring over drafted legislation that is just waiting to be dusted off and introduced into Congress for passage.

It is important to note that the chances of these changes being implemented in the near future is not limited to what happens in the November elections. Some commentators suggest that even under a continued Republican-controlled government, many of the changes discussed below could be implemented as the nation grapples with the economic pressures stemming from the coronavirus pandemic of 2020.

Proposed Policy Adjustments under a Democratic Presidency

Some of the key proposals most relevant to estate and tax planning include adjustments to estate, gift, and income taxation laws.

Estate, Gift, and Generation-Skipping Transfer (GST) Taxes

In 2020, the estate and gift tax exemption is set at $11.58 million (indexed for inflation), with any wealth over that amount taxed at a 40 percent rate as it passes to heirs. This exemption amount is scheduled to be lowered to $5 million (also indexed for inflation) on December 31, 2025, unless new legislation is passed before then.

Presidential candidate Biden has suggested that he would support legislation to reduce both the estate and GST tax exemptions to $3.5 million per individual and would lower the lifetime gift tax exemption to $1 million.

In addition to reduced transfer tax exemption amounts, a number of Democratic tax reform proposals have discussed returning estate tax rates to historic norms. What does that mean? In the 1940s, the top estate tax rate was 77 percent, and under 2001 federal tax law, it was as high as 45–55 percent. It therefore seems likely that we could see an upward adjustment in the transfer tax rates.

Capital Gains Taxes

Our current law taxes capital gains as regular income if those gains are realized on property held for less than one year. For long-term capital gains (gains on property held for a year or longer), there is a graduated tax rate depending upon the tax filer’s income level (0 percent, 15 percent, or 20 percent). For individuals and couples who earn more than $200,000 and $250,000 per year respectively in net investment income, there is an additional 3.8 percent surtax added to their capital gains tax rate.

In addition, the current law allows for a step-up in basis to the date-of-death value on appreciated property transferred after the owner dies. This allows for selling or liquidating inherited property shortly after the death of an individual with little to no capital gains taxes assessed on the sale of the property.

Today’s law also allows for like-kind exchanges on appreciated property such as artwork and rental properties. These laws allow people to reinvest the gains that they earn on appreciated property into similar types of property without ever having to pay capital gains taxes when sold. If the individual keeps making such like-kind exchanges on appreciated property until the individual’s death, the capital gains accumulated in that property will be erased by the basis step-up rules.

Presidential candidate Biden has proposed changes that would either (1) limit the step-up basis rule for inherited property and impose a carryover basis rule for inherited property or (2) impose recognition of gain on property at the owner’s death. Additionally, the Democratic tax plan proposes eliminating like-kind exchanges as well as imposing a 39.6 percent long-term capital gains tax rate on individuals earning more than $1 million per year. If the law leaves the 3.8 percent surtax on net investment income in place, the effective top federal tax rate on long-term capital gains could reach over 43 percent.

If these changes are implemented along with the changes to the estate tax exemptions and rates, many estates could see significant tax bills at the estate owner’s death.

How Can You Help Your Clients Prepare?

There are a number of possible estate planning strategies that you should discuss with your clients as soon as possible so they do not get caught by surprise should the election usher in the above changes. Here are four strategies for consideration:

1.   Grantor Retained Annuity Trust: A properly structured grantor retained annuity trust (GRAT) allows your client to transfer more property to beneficiaries at a lower gift tax value than if the client were to make gifts outright to those same beneficiaries. GRATs are excellent estate planning techniques that are still available today. However, it is important to note that a number of Democratic tax law proposals have identified the use of multiple short-term GRATs as a tax loophole that needs to be curtailed. Thus, the window of opportunity for using a GRAT to transfer large amounts of wealth at a significant discount may be closing soon.

2.   Installment Sale to an Intentionally Defective Grantor Trust: This technique allows the client to sell appreciating property such as real estate or even a family business (such as a family limited partnership) to a carefully drafted trust in return for an installment note using the currently low applicable federal interest rate. Cash should also be transferred into the trust (a taxable gift) so that the trustee has cash with which to make payments on the installment note (usually 10–15 percent of the property’s fair market value) in order to avoid an argument from the Internal Revenue Service that the sale is actually a gift. The installment note can be structured as an interest-only note with a balloon payment at the end of the loan term or even as a self-canceling installment note. Property in the trust must obtain a rate of return or growth in excess of the interest rate for this strategy to succeed. In a low interest rate environment like today, there is a much greater chance of obtaining that favorable result.

This strategy requires that your client be prepared to pay income tax on the income generated by the trust property. However, this feature allows for even more indirect and tax-efficient wealth transfer. At the end of the loan term, income and appreciation exceeding the required note payments pass to the trust beneficiaries, free of gift, estate, and GST tax (if designed to do so). This planning tool works well for clients with income-generating real property or business interests that are expected to appreciate.

3.   Spousal Lifetime Access Trust: The spousal lifetime access trust (SLAT) strategy requires the client to make a gift of property into an irrevocable trust for the benefit of the client’s spouse (as a beneficiary of the trust) and other beneficiaries (children or grandchildren). The trust names an independent trustee who has discretion to make distributions among the various beneficiaries. The transfer to the trust is intentionally designed to not qualify for the unlimited marital deduction. This allows for fuller utilization of the gifting spouse’s estate exemption and shields the appreciation on the transferred property from future gift and estate tax.

This strategy is designed to take advantage of the current high exemption amounts. A SLAT is a grantor trust for income tax purposes (the trust will not pay income tax, allowing trust property to grow estate tax free during the donor’s lifetime).

Ideal clients for a SLAT strategy are happily married couples (because the SLAT is irrevocable) who own property that is expected to significantly appreciate and who can transfer such property irrevocably without jeopardizing their current standard of living. It is important to understand that there are carryover basis considerations associated with this strategy that should be carefully calculated and weighed before implementation.

4.   Irrevocable Life Insurance Trust: Although the irrevocable life insurance trust (ILIT) strategy has not been utilized as much recently as in the past, it is still a highly effective one—especially in an environment where the estate and gift tax exemption amounts may be reduced significantly in the near future, putting clients in a use-it-or-lose-it scenario. This technique calls for a client to transfer property (usually cash) to an irrevocable trust. The gift can be made all in one year and may reduce the client’s gift tax exemption to some extent. However, the cash in the hands of the trustee can be used to purchase life insurance on the client which, when the policy pays out at the client’s death, passes to the trust free of income tax and then on to the trust beneficiaries outside of the client’s estate, and therefore free of estate taxes. Your client typically must have sufficient cash reserves to be able to contribute to the trust and be in good enough health to qualify for a life insurance policy.

Working Together

Even if your clients are not fully prepared to pull the trigger on any of the above strategies before the 2020 election results are known, you should nevertheless plant the seed in their minds so that when the time comes to make a decision, they will be that much more prepared to move quickly. Educating your clients about these and other valuable wealth preservation strategies has the potential to solidly embed you as an essential and trusted family advisor to multiple generations of clients.

By working together, we can help our clients navigate whatever changes these uncertain times may bring. Thoughtful estate planning can provide our clients with peace of mind while they are living and ensure that their wealth is passed on to their loved ones in the most efficient and protected manner. Contact us to discuss how we can weather these changes together.

Sincerely,

Posted in Blog | Comments Off on Preparing for Possible Tax Law Changes after the Election

Should you change business forms in light of recent tax legislation? If you’re starting a new business, which type of entity is best for you? Discover the relative merits and detriments of the various entity choices after the recent spat of tax law changes. Topics covered include: · Tax implications of LLCs, LLPs, S-corps, regular corporations and partnerships · Best ways to avoid personal liability for business debts · Planning for future modified ownership structures · Equity compensation alternatives available for key employees Open to clients, the general public, and financial advisors. 1.5 continuing education hours are available for CFPs, CPAs, and other professionals who attend this presentation. This presentation is offered by Charles A. “Chuck” Borek, J.D., MBA, CPA, a business and tax attorney with almost 30 years of experience representing individuals, small businesses, and nonprofits. Chuck earned his joint JD/MBA summa cum laude from the University of Baltimore, where he was the Editor-in-Chief of the Law Review and the recipient of the 1993 Law Faculty Award. He has taught law students as a visiting professor and adjunct professor of law at American University and the University of Baltimore and has lectured at Dickinson Law School of Penn State University. Chuck has written for Thomson-Reuters, Bloomberg BNA, and the American Institute of Certified Public Accountants. His book on contract drafting is used by lawyers throughout Maryland and has been cited by the Maryland courts. Additionally, Chuck presents seminars to CPAs and lawyers around the country though his company, The Borek Group, LLC, including presentations to “Big 4” accounting firms and Fortune 500 companies. He is also Special Counsel to Elville and Associates, P.C.

More Webinars from Elville and Associates

The education of clients and their families through counseling and superior legal-technical knowledge is the mission of Elville and Associates.  We hold multiple educational events every month. Click to view our calendar of educational webinars and events or visit the Elville and Associates YouTube channel to view recordings of our past webinars.

Posted in Videos & Webinar Recordings | Comments Off on Webinar — Which Form of Business Entity Is Best for You?, with Chuck Borek, J.D., MBA, CPA

A controversial policy that reduces the benefits of military spouses is on the way out. The so-called military “widow’s tax” cuts assistance to surviving military spouses who qualify for benefits under two different military benefit programs.

The two programs are:

• The Department of Defense’s Survivor Benefit Plan (SBP), which allows a military retiree to contribute part of their benefit to ensure that family members receive an annuity of up to 55 percent of their retirement pay when they die.
• The Department of Veterans Affairs’ Dependency and Indemnity Compensation (DIC), which awards around $15,000 a year to survivors of veterans or troops who die of service-related causes.

Under the current policy, even though SBP and DIC are different programs paid for by different federal agencies, spouses who are eligible for both benefits have their SBP payments offset by the DIC money the spouse receives. An estimated 65,000 families are affected by the offset, costing them thousands of dollars in benefits. Military families have been fighting to eliminate the widow’s tax for years, but have not had success until now.

Signed into law in December 2019, the bipartisan FY20 National Defense Authorization Act eliminates the widow’s tax in phases beginning in 2021. SBP recipients will receive one-third of the DIC offset amount in 2021 and two-thirds in 2022. In 2023, spouses can receive both benefits in full.

For more information about the change, click here.

If you are a veteran or surviving spouse and have questions related to planning, including the VA Aid & Attendance pension, contact our office and ask to speak to Principal and VA-accredited attorney Lindsay V.R. Moss at lindsay@elvilleassociates.com, or at 443-393-7696.  We thank you for your service and look forward to being a resource to you.

#elvilleeducation

Posted in Blog | Comments Off on Long-Reviled Military ‘Widow’s Tax’ Is Finally Being Phased Out

Elville and Associates’ managing principal and senior estate planning attorney Olivia Holcombe-Volke offers this important and inclusive discuss related to estate planning for business owners. Perhaps you inherited a family business, and it is meant to carry on in the family, as a legacy. Or perhaps you built a business from the ground up, and have a star employee you want to ensure will be empowered to carry on the business when you no longer can. Perhaps the business interest is your most valuable asset, or perhaps it isn’t all that lucrative from a financial perspective, but the intellectual property aspect of it should be protected against loss. A business is a unique asset, and business owners, regardless of the size or type of the business, or size or type of the ownership interest, have a unique concern: what will happen with the business interest in the event of my incapacity or death? Often, owners of any sort of business interest have the desire for the business interest to be handled in a particular way, or to pass on to a particular person. Even when that is not the case, when a business owner feels no particular “calling” to ensure that the business carries on in a particular way, or with a particular person, it is important to have documents that will provide for the business to wind down in an orderly fashion. Ensuring any of this requires careful planning. Among the many topics of discussion include: What will happen to your business if you become incapacitated? What will happen to your business if you die? The who, what, when, and how of planning for business succession Plus, a general overview of the fundamental estate planning documents to protect you, your family, and your business in the event of the unexpected.

More Webinars from Elville and Associates

The education of clients and their families through counseling and superior legal-technical knowledge is the mission of Elville and Associates.  We hold multiple educational events every month. Click to view our calendar of educational webinars and events or visit the Elville and Associates YouTube channel to view recordings of our past webinars.

Posted in Videos & Webinar Recordings | Comments Off on Estate Planning for Business Owners with Olivia Holcombe-Volke

Allocating your personal possessions can be one of the most difficult tasks when creating an estate plan. To avoid family feuds after you are gone, it is important to have a plan and make your wishes clear.

When passing on possessions to your heirs, savings and investments are easy to divide up, since they can be turned into cash. Real estate can also be turned into cash or co-owners can share it. The most difficult items to divvy up are personal possessions—silverware, dishes, artwork, furniture, tools, jewelry — items that are unique and don’t have a set resale value. In legal speak, these are known as “tangible personal property” and can become the focus of family fights. Often one or more children claim that a parent had promised them a particular item. Things may disappear from a house or an apartment shortly before or after a parent’s death, or a child may claim that her 90-year-old somewhat-demented mother “gave” her a cherished diamond ring during life. These types of situations can create great suspicion and irrevocably split families. Siblings may stop communicating due to their anger and distrust.

Clarity about one’s wishes can go a long way toward avoiding these difficulties. Also, it’s important that the personal representative of an estate (also called an executor) secure the deceased person’s residence as soon as possible after death to make sure items don’t disappear. Here are a few steps you or the personal representative of your estate can take to make sure splitting up your stuff doesn’t split up your family:

• List the most important or valuable items in your will. While your will could get very long if you tried to list all of your possessions, you may have a few family heirlooms or valuable artworks that you want to stay in the family. It may be easier for all concerned if you say who should get what. But talk with your children or other family members first to determine who values which items most.
• Direct that certain items be sold. If you have one or more possessions that have much greater value than others, it can be difficult to make your distributions equal. It may make more sense to sell the items of greatest value and distribute the proceeds. For example, in a family whose parents were able to save one painting by a famous artist when they fled Europe during the Holocaust, the children sold the painting and split the proceeds equally, since it would not have been fair for any one of them to have received the painting and none had the resources to buy out the other two. The painting was auctioned at Christie’s and they were all quite happy with the results.
• Write a memorandum. You can write a list of who should receive what item. If your will references the list, it will be enforceable. Be careful about how you describe each item so that there is no confusion. Unlike your will, this list can be as long as you like, and you can change it without having to go back and redo your will. Send a copy to your lawyer as well as any updates as they occur to ensure the list doesn’t get lost or ignored when the time comes.
• Give everything away now. Well, perhaps not everything, but the more you disburse during life, the less that will have to be dealt with at death. When you make gifts, make sure that everyone knows about it so that the person receiving the gift is not suspected of having pilfered your jewelry box, for instance. There may be items that you would like to give away, but still want in your house. This is especially true of artwork and furniture. As long as the new owner is agreeable, you can keep these items around. You might want to tape a note to the back or underside explaining that the Rembrandt, for instance, belongs to your daughter, Jane. (Of course, if it is a Rembrandt, you will need to file a gift tax return and a transfer document.) Be aware that for highly-appreciated property, for tax reasons, it may be better not to make gifts during life because they’ll lose the step-up in basis. So check with your estate planning attorney or tax accountant first.
• Get an appraisal. For the tax reasons referenced above and to guide you in deciding who should get what, it can be useful to know the monetary value of the items you’re giving away, whether during life or at death. This can also be very important for your personal representative and for your heirs in making their decisions.
• Use a lottery. If you do not made choices regarding your estate plan, your personal representative may want to set up a lottery system for distributing the tangible assets. The representative can put names or numbers into a hat and someone can draw them out to determine the order in which the family members or other heirs will choose items. In order to inform the process, the personal representative should create a list of the most valuable items, including their appraisal value if one has been obtained. If everyone is in the same location at the same time, they can simply take turns. If that’s not possible, the personal representative can add pictures to the list to help identify the items and the beneficiaries can choose online, informing the personal representative of their choices as their turns come up. The order of who chooses can change each round, whether reversing or moving along progressively. Here’s the distinction between these two alternatives:

Reversing: 1,2,3,4,5; 5,4,3,2,1; 1,2,3,4,5
Progressive: 1,2,3,4,5; 2,3,4,5,1; 3,4,5,1,2

The more you decide who gets what rather than leaving the decisions to your family, the less likely the distribution process will create family strife.

The attorneys at Elville and Associates strongly encourage a family meeting as part of its estate planning process for its clients.  This is an ideal way for clients’ beneficiaries, agents, and advisory team to fully understand how clients’ plans are intended to work, and ensure everyone is on the same page from the beginning.  To learn more about the importance of the family meeting, please click here to read an article by Elville and Associates’ attorney and principal Olivia Holcombe-Volke on the subject.

Should you wish to set a time to meet with one of Elville and Associates’ attorneys to discuss your planning needs, please contact Legal Administrator Mary Guay Kramer at mary@elvilleassociates.com or on her direct line at 443-741-3635.

#elvilleeducation

Posted in Blog | Comments Off on How to Divide Up Personal Possessions Without Dividing Up the Family

The coronavirus pandemic has forced nursing homes to place a number of restrictions on their residents. These constraints are having the unintended consequence of making it more difficult for nursing home residents to vote.  Hundreds of thousands of nursing home and assisted living community residents could be disenfranchised.

Older Americans are some of the most reliable voters, but nursing home residents face challenges to votingeven in normal times, and they are encountering even greater barriers this election season. In response to the coronavirus pandemic, nursing homes have locked down, prohibiting family and friends from visiting residents and residents from leaving the facilities. This means residents may not be able to leave to vote and also will not be able to have help from family members or organizations in obtaining and filling out mail-in ballots.

In past years, nursing homes and assisted living facilities often acted as polling places, but many of those are being moved due to the pandemic. In addition, nonpartisan organizations have historically been able to enter nursing homes to assist residents with their ballots, but it is unclear whether this will be allowed this year. North Carolina and Louisiana specifically prohibit nursing home staff from assisting residents with their ballots, but even in states that don’t explicitly prohibit it, overworked staff may not have the time to help residents.

While federal law requires nursing homes to protect their residents’ rights, including the right to vote, it is “a really open question to what extent people in long-term care institutions are going to be able to participate in our election in November,” says Nina Kohn, a law professor at Syracuse University who has studied facility residents’ voting-rights issues. Kohn warns that “we should be clear that there is tremendous reason to be concerned that nursing home residents will be . . . systematically disenfranchised in this election,”

For more information about this issue, click here, here, and here.

Should you have a question related to a nursing home or assisted living-related matter for one of your family members, don’t hesitate to reach out to one of our experienced elder law attorneys at Elville and Associates.  President and Principal Attorney Stephen Elville or Partner and Senior Elder Law Attorney Lindsay Moss would be more than happy to be a resource to your family.  Steve and Lindsay may be reached at steve@elvilleassociates.com and lindsay@elvilleassociates.com, respectively.  To learn more about Steve, please click here, and to learn more about Lindsay, please click here.

Posted in Blog | Comments Off on Nursing Home Residents Face Even Greater Barriers to Voting Amid Coronavirus Pandemic

By: Stephen R. Elville — President and Principal Attorney of Elville and Associates, P.C.

For most aging singles and couples, it is important to become educated about elder law-related matters as a practical necessity. But how does one become educated regarding this all too often mysterious, ambiguous, and esoteric subject matter? The following fictitious but all too real short story may provide insight.

Gigi is married with three adult children. Her husband, Jerry, was a successful teacher. During the first few years of their retirement, Gigi and Jerry enjoyed travel and spending time with their grandchildren. Then, over a period of several months, Jerry developed memory issues and was eventually diagnosed as having a form of dementia, Alzheimer’s-type. After caring for Jerry for many months, Gigi began to search for answers to many questions – how will I pay for or manage the cost of care?; is it too late to buy long-term care insurance?; how can I get help in my home and who will manage that caregiving? how can I get respite?; how can I preserve my assets and what will happen to my financial future?; how do I still leave assets for my children now that I am facing this crisis?; how do I get a level of care assessment?; how does the world of Medicaid work and what will happen if Jerry needs a nursing home?

After months of enormous worry and stress, and after an exhaustive search for information (much of what was provided being misinformation and myth rather than facts), Gigi sought the advice of a knowledgeable elder law attorney. She obtained answers to her pressing questions, was relieved of her sense of despair and hopelessness, became empowered through the knowledge that she would not lose all of her financial assets or her home, learned about asset protection and estate planning strategies for elder law, was directed to resources and programs that provide level of care, assessment, care management, financial and tax advice, and more. The main lessons here are that Gigi sought help and became empowered.  Because she sought competent professional advice about elder law matters, Gigi went from a position of weakness to a position of power and direction. And just as important, Jerry’s care needs for the long-term future were assessed and addressed.

An elder law consultation is a powerful tool

The elder law consultation is a powerful tool for families facing the care and financial issues involved in today’s aging process. Gigi’s example is illustrative of a crisis or near-crisis situation; whereas it is always advisable to become educated about elder law-related matters well in advance of a crisis. Elder law essentials workshops are available for this purpose with what is known as a pre-crisis elder law consultation as follow-up.

So how do you go about becoming educated through an elder law consultation?

The process is straightforward – there are 3 steps: (1) call or send an email to your elder law attorney to set an appointment; (2) attend the elder law consultation meeting and be prepared to take notes and absorb information – it is advisable to bring a family member or professional advisor along with you for support and collaboration; and (3) be ready to act upon the information provided so that the process of accomplishing your goals can begin. A comprehensive elder law consultation is one of the most powerful tools available to legal consumers today. Take the time to think about this elder law issue.

To schedule an elder law consultation, contact Stephen R. Elville at 443-393-7696, or via email at steve@elvilleassociates.com; or contact Mary Guay Kramer, at 443-741-3635, or via email at mary@elvilleassociates.com.

Tags: Elder Law Consultation
Posted in Blog | Comments Off on An Elder Law Consultation – A Way to Seek Guidance and Become Empowered

While simultaneous death is certainly a possibility, the likelihood that one spouse will predecease the other is a reality which must be contemplated and discussed. Remarriage and asset protection are two of the most common concerns voiced by married couples when thinking about how the estate will be handled in the event that one spouse dies before the other. In these discussions, it often comes as a complete surprise to learn that there are also certain statutory mandates regarding inheritance between spouses that must be taken into account. Partner and senior estate planning attorney Olivia R. Holcombe-Volke offers this insightful and important discussion about “Estate Planning and the Surviving Spouse: Considerations, Recommendations, and Procedures.” Topics discussed include: — How to ensure that your estate “plan” survives in the event your surviving spouse gets remarried, including a review of statutory spousal rights to assets, the importance of pre- and post-nuptial agreements, and options for irrevocable trust planning to control the use and distribution of your estate in the event you pre-decease your spouse; — An overview of available mechanisms for providing enhanced asset protection for the benefit of your surviving spouse; and A discussion of the relevant estate and income tax considerations. Open to clients, advisors and the general public. For Certified Financial Planners and CPAs, 1.5 continuing education hours are available for attending this presentation.

More Webinars from Elville and Associates

The education of clients and their families through counseling and superior legal-technical knowledge is the mission of Elville and Associates.  We hold multiple educational events every month. Click to view our calendar of educational webinars and events or visit the Elville and Associates YouTube channel to view recordings of our past webinars.

Posted in Videos & Webinar Recordings | Comments Off on Estate Planning and the Surviving Spouse: Considerations & Procedures with Olivia Holcombe-Volke

Authored by: Olivia R. Holcombe-Volke, J.D. – Partner and Senior Estate Planning Attorney – Elville and Associates, P.C.

Sometimes called a Letter of Intent, a Letter of Instruction, a Letter of Desires – Regardless of the Title, the Import is the Point

Imagine – as unpleasant as it is to do so – that you are no longer able to give voice to your thoughts, feelings, intentions, knowledge, experience, or preferences.  Imagine that this happens while you are still alive, but due to incapacity of some sort, you are no longer able to communicate.  And of course, after death, your ability to express anything will be mightily limited (the purported abilities of the Ouija board – invented by one of Maryland’s own(!) – notwithstanding).

The fact is, there will come a time when you are not the you that you are today.  Is there anything – any information – that you want to be sure is known, in that event?

Why a Letter of Wishes is Important

If you have already done the vital work to put an estate plan in place, to make certain that your affairs are in order, if and when this eventuality takes place?  Good.  If you have not gotten around to it yet, due to cost, lack of available time, or feelings that it is not necessary for you?  With the utmost compassion and understanding, I, as an estate planning attorney, will simply say:  you need to.  At a minimum, you need to have an Advance Directive, Financial Power of Attorney, and Last Will and Testament in place.  Perhaps some form of Trust planning is right for your circumstances, whether a Revocable Trust, Irrevocable Trust, or Supplemental Needs Trust, or some combination thereof.  All of this depends upon your particulars, but the point is that you need to have a plan in place, documented by the necessary legal documents to effectuate the plan, when necessary.    

But there is more.  Beyond the bare legal documents themselves – that is, those documents that are required by statute in order to effectively empower another person to act as your healthcare agent, your financial agent, and/or to distribute your estate at your death (and to whom, and how) – beyond the legal documents that give power and effect to your intentions – there remain the considerations and recommendations of outlining your intentions in a bit more detail.  

What do I mean?  What additional details?  For example:

• About your personal preferences regarding your own physical care and comfort, in the event you are still alive, but no longer able to communicate (e.g. “I want to listen to classical music or audio books on Renaissance history; I do not want to be in a room with the television on all of the time; I want to be near a window, and taken outside regularly; I want to receive pastoral counseling,” etc.);
• About your perspective on prioritizing the expenditure of your assets for your care, versus preserving assets to the greatest extent possible for your beneficiaries at your death;
• About your final arrangements (i.e., details regarding a memorial service or celebration of life, placement and handling of your remains; etc.);
• About your perspective on investing or otherwise managing your assets (do you have preferences regarding types of investments, levels of risk, certain belief systems/ideologies that are important to you in terms of how your money is invested?);
• About your desired use of discretion, if any aspect of your legal documents is discretionary (what will help guide the person in charge regarding how you want them to exercise that discretion?);
• About your family dynamics, family history, your reasons for certain aspects of your estate plan, and/or your concerns regarding certain people, relationships, or situations;
• About your minor children, and details regarding their upbringing, in the event you are not around or able to participate in that upbringing;
• About your special needs child, or any other special needs individual for whom you are involved with his or her care (i.e., you may know that he or she gets stressed by the sound of the television, and soothed by the sound of the Beach Boys – how would a future caregiver know that?);
• About the use, distribution, or expenditure of money or assets you are leaving at death (e.g. “try to keep the cottage in the family; education should be a top priority.”);
• About specific professionals, companies, service providers, or financial institutions whom you like or recommend, or don’t like or don’t recommend;
• About your pets, regarding their care (i.e. name of veterinarian, preferred food or treats, etc.)

I often say to clients, “perhaps your [family member, friend, trusted advisor – whomever is named as the appointed agent] already knows all of this.  But they likely don’t, and it never hurts to give a bit more detail and information, to help guide someone if they are ever acting on your behalf, with regard to your health or finances or estate or beneficiaries.”  And particularly if there is ever a professional who is handling things for you or your beneficiaries, without having had a personal relationship with you or your family, or your beneficiaries – how will they know any of these important details, if you don’t somehow let them know?

All of these particulars, and much, much more, can be set forth in a separate writing, which will serve the purpose of elaborating upon the bare minimum of information that is covered by the legal documents themselves.  This is sometimes called a Letter of Intent, or a Letter of Instruction, or a Letter of Wishes, or a Memorandum of Intent.  Regardless of the title, this separate letter is intended to serve the purpose of providing ancillary supplemental information to the legal documents themselves.

An additional virtue of illuminating these details in a separate letter (separate from the legal documents themselves) is that it allows for much greater ease in changing the letter over time, without the need to re-do or re-sign all of the legal documents, every time.  A vital aspect of the effectiveness of such a letter is that its existence is known by those who need to know, so, it is important to make sure that a copy of the letter is provided to everyone who might be involved or relevant (who might need to know), and perhaps (depending on the circumstances) to keep a copy with your legal documents, and provide a copy to your financial advisor and estate planning attorney.  If you revise or change the letter over time, make sure that any prior versions are destroyed, in order to minimize the risk of confusion or contradiction.  And finally, do be aware of the difference between what is legally binding versus merely informational, explanatory, instructive, personal – and avoid the risk of possible conflict between the language in the legal documents themselves versus the letter of instruction/intent/wishes,  which could open the door to unintended issues.

All of which is to say, discuss this with your estate planning attorney.  The starting point is to have the necessary legal documents.  But a truly comprehensive estate plan will include more than the bare legal documents, and will provide your designated health, financial, and estate agents/actors with all of the information they may need to accomplish your desires, intentions, and wishes.

Tags: letter of wishes
Posted in Blog | Comments Off on A Letter of Wishes, By Any Other Name

Choosing a nursing home for a loved one is a difficult decision and it can only be made more confusing by the various rating systems. A recent study found that using both Medicare’s Nursing Home Compare site and user reviews can help with the decision making.

The official Medicare website includes a nursing home rating system. Nursing Home Compare offers up to five-star ratings of nursing homes based on health inspections, staffing, and quality measures. However, Medicare’s rating system is far from perfect. The staff level and quality statistics ratings are based largely on self-reported data that the government does not verify. The ratings also do not take into account state fines and enforcement data or consumer complaints to state agencies.  Nursing homes have learned how to game the system to improve their ratings.

While Nursing Home Compare doesn’t include consumer feedback, Yelp and other online platforms like Facebook, Google, and Caring.com allow users to review individual nursing homes. These user reviews are highly subjective, and it can be difficult to judge their legitimacy. These reviews are not usually taken seriously–for example, consumer guides to finding a nursing home do not usually suggest that consumers consult online reviews.  (It should be noted, however, that Caring.com goes to great lengths to ensure the integrity of its reviews, including having senior care experts read every submission before publication.)

In order to better understand what consumers were saying about nursing homes online, researchers at the University of Southern California evaluated 264 Yelp reviews and grouped them into categories. The researchers found that consumers rate different aspects of nursing home care than does the official rating system. User reviews were more emotional and more likely to focus on staff attitudes and responsiveness rather than on the quality of health care.

The researchers concluded that user reviews can be used in conjunction with the Nursing Home Compare site to paint a fuller picture of life at the nursing home because they present complementary information. According to the study, online reviews shouldn’t be dismissed because they “directly capture the voices of residents and family members, precisely the kind of information [nursing homes] and their consumers need to hear and may want to act on, if resident-directed care is to be achieved.”

Yelp has gone a step further than other consumer review sites and has teamed up with the investigative news organization, ProPublica, to provide users with additional information. ProPublica’s Nursing Home Inspectsite, allows users to compare nursing homes based on federal data. Yelp users viewing a nursing home review page see a ProPublica box that provides information on the nursing home’s deficiencies and fines.

To read an article about the study, click here.

For more on choosing a nursing home, contact one of our elder law attorneys here at Elville and Associates.  Both Principal Attorney Stephen Elville and Senior Elder Law Attorney Lindsay Moss have extensive experience in guiding clients through the process of choosing a nursing home for loved ones, and working with clients in crisis and pre-crisis situations.  Steve can be reached at steve@elvilleassociates.com, while Lindsay can be reached at lindsay@elvilleassociates.com.

Elville and Associates — Planning for Life, Planning for Legacies.

Client Education | Collaboration | Compassion

Posted in Blog | Comments Off on Which Nursing Home Rating System Should You Trust?