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

 

March 31, 2020 – At present there are few things more important than containing and stopping the spread of COVID-19, taking care of those who are infected, supporting doctors, nurses, other medical personnel, and hospitals, providing vital masks, ventilators, protective and other equipment that is urgently needed, and sympathizing and supporting those who have lost loved ones (in Maryland, in the U.S., and around the world).  Elville and Associates urges Marylanders and any persons reading this article to adhere to CDC, national, state, and local pronouncements and policies concerning safety, social distancing, and sheltering in place as absolutely essential to saving lives and minimizing suffering.  To say the least, this is a time for unity, community, action, and contemplation.

 

For those persons who are concerned about what they and other family members need to do right now in terms of estate planning, elder care and special needs planning, and incapacity planning in the face of the increasing pandemic, the following are practical steps that may be taken by any person of reasonable intelligence, ability, and access to telephone or electronic media and communications.  For clarity, I have outlined these as six-step processes.

 

Powers of Attorney, Advance Medical Directive, and MOLST – arguably the most important planning action any Marylander can take right now is to check on the status and location of their current incapacity planning documents – financial power(s) of attorney and advance medical directive.  Furthermore, a working knowledge of the MOLST (Medical Order For Life Sustaining Treatment) is essential, especially for those over sixty (60) years of age.  I will cover the fundamentals of each of these documents briefly here.

 

Financial Power of Attorney – this essential incapacity planning document provides for the management of your financial affairs should you become incapacitated (when you no longer have the ability to manage your own financial matters).  Some estate planning and elder law attorneys consider the financial power of attorney to be the most powerful and most important of all estate planning documents.  I do not disagree.  There is a reason for this – having at least a basic power of attorney means that you are very likely to avoid adult guardianship of your estate or property should you become incapacitated, because by being proactive with the implementation of a properly constructed financial power of attorney you are choosing the private management of your affairs without the necessity of guardianship and the involvement of your local Circuit Court.  Moving away from the issue of avoidance of guardianship and self-determination, a well-crafted financial power of attorney also addresses your personal preferences concerning the question of how much flexibility (how much power) you want your agent to have.  Should your agent’s authority be limited to only basic fiduciary powers – for example those routine powers such as the management of bank accounts and retirement accounts, the power to buy and sell property, and so forth?  Or, should your agent’s authority include broader fiduciary powers, such as the power to create and fund trusts, receive compensation, make gifts of your assets, spend down for Medicaid eligibility, and other more aggressive powers?  This issue comes down to one main question:  how much flexibility do I want my agent to have during a time of my incapacity?  The answer to this question is very personal and will vary for each individual.  From an estate planning, and in particular, from an elder law planning perspective, the more flexibility you provide for your agent (your attorney-in-fact under a financial power of attorney), the more options your agent will have to pursue and fulfill your goals should you be incapacitated.  Since all planning is goal-driven, it follows that the powers you provide for your agent in a well-crafted and well-considered financial power of attorney should reflect those goals, whether they be for the minimization of taxes, asset preservation, charitable intentions, or the protection of loved ones.  Yes, my third and last point about financial powers of attorney in this article relates to this last reference.  Most people do not consider that a financial power of attorney is not only for their own protection in the event of incapacity, but is also for the protection of anyone who may be dependent on them.  So a comprehensive power of attorney or set of powers of attorney will typically incorporate provisions that provide for the protection and support of not only you, but anyone who may be dependent upon you.  This realization is an epiphany for most people.  Thus, a financial power of attorney that includes well-chosen agents – those trusted persons (fiduciaries) who will manage your affairs if you are no longer able to – is a substitute for guardianship, provides for great flexibility or limited flexibility for your agent in accordance with your goals, and can provide not only for your support but for the protection and support of any person who may be dependent on you.  So during this time of international health crisis a financial power of attorney represents one of the most powerful legal tools you can employ.  Based on what we know right now, the COVID-19 illness is much more likely to render a person disabled, at least temporarily, than to cause death.  For this reason, every Marylander should take the following action steps regarding financial power(s) of attorney:

(1) Locate your current financial power(s) of attorney document;

(2) Review your financial power of attorney document carefully and determine when it was signed and whether it is a Maryland Statutory Power of Attorney (if so, you will see those words at the top of the first page);

(3) If your Power of Attorney was signed before October 1, 2010, consider executing a new financial power of attorney (or set of financial powers of attorney) as soon as possible, as financial powers of attorney executed before the effective date of the Maryland Power of Attorney Act (October 1, 2010) are not enforceable by law (but not necessarily invalid);

(4) If you executed a new financial power of attorney after October 1, 2010 but have not updated your financial power(s) of attorney since that time, consider executing new financial power(s) of attorney to ensure that your document(s) contains all the updates to the Statutory Power of Attorney Form since that time;

(5) Whether you previously executed a single financial power of attorney or a set of two (2) financial powers of attorney (one Statutory and the other a non-statutory form), you should review the powers contained in the document(s) and determine whether those powers are sufficiently broad to accomplish your goals (this may require the advice of an attorney); whether your agents and their contact information are correct; whether certain agents are no longer desirable choices or are not available to serve as your agents; and whether new agents should be appointed.

(6) If you do not have a financial power of attorney, as a practical matter it is essential that you execute one as soon as possible.  This is true whether or not you utilize the services of an attorney.  You may obtain a financial power of attorney, including a Maryland Statutory Power of Attorney, online or through an attorney.  What’s important right now is that you have a financial power of attorney; that it is executed properly and is valid in the State of Maryland (if you are a Maryland resident); that it reflects the agents of your choice, along with their accurate contact information; and that you have considered when your agent’s power is effective, along with the powers you wish to provide the agent (degree of flexibility).

Bottom line – a financial power of attorney is an essential estate planning document at all times, but especially now during this world and national health crisis.  Your financial power of attorney must be witnessed by two independent witnesses and must be notarized.  One of the witnesses can also serve as a notary.  For further guidance about the requirements of document execution and the practical problems presented by the need for social distancing, please refer to further information on our website at www.elvilleassociates.com.

 

Advance Medical Directive – this essential health care document allows you to choose and appoint your health care agents; provide specific instructions and customizations in nearly unlimited fashion; set forth your goals, values, and preferences; determine when the power of your agent(s) becomes effective; make end-of-life decisions or preferences in advance; choose pain relief to alleviate potential suffering; decide whether your agent has the flexibility to change your decisions, or whether your decisions should not be changed even if there is some “better” choice (in the opinion of your agent); make organ donation and bodily donation choices; and make final arrangement decisions, including funeral and burial, cremation, or other arrangements or instructions.  Similar to what I’ve described about financial power of attorney documents in this article, an advance medical directive that includes well-chosen agents – those trusted persons (fiduciaries) who will manage your health care affairs if you are no longer able to – is a substitute for guardianship of your person, and during this time of the world and national health crisis is one of the most powerful legal and healthcare tools you can employ.  For some people, the advance medical directive is the most important estate/elder law document.

 

Because of the fairly recent introduction of the MOLST Form (2013-2014) discussed below, there is much speculation that the advance medical directive is no longer important.  To this I say “don’t believe it.”  The advance medical directive is still very important because (a) it facilitates the appointment of your chosen agents and as mentioned above represents a substitute for guardianship of your person; and (b) it is a written representation of your expressed wishes concerning your health care – and as such it is part of your right of self-expression and self-determination.  What could be more important?  For these reasons, and especially in light of the COVID-19 threat, every Marylander should take the following action steps regarding their advance medical directive:

(1) Locate your current advance medical directive documents;

(2) Review your advance medical directive carefully and determine when it was signed;

(3) If your advance medical directive does not contain the more recent additions by the Attorney General pertaining to flexibility and the ability of an agent to change your decisions (have flexibility concerning your stated preferences), consider executing a new advance medical directive as soon as possible (assuming flexibility for your agent is desirable);

(4) Review the number of original, executed advance medical directives you may have.  If you only have one original copy, consider making photocopies as these are readily accepted by hospitals and medical facilities;

(5) Review your choices and the provisions as set forth in your current advance medical directive and determine the following:  do these choices and provisions represent my current choices or preferences, and my overall goals (this may or may not require the advice of an attorney)?; are my agents and the order of my agents correct, and is the contact information for each agent updated and correct?; are any of agents no longer desirable choices and should they be replaced?; are my agents still available to serve as my agent and can I depend on them at a time of crisis?; and are there any practical or other limitations that would prevent my chosen agent(s) from serving as such?

(6) If you do not have an advance medical directive, then as a practical matter it is essential that you execute one as soon as possible.  This is true whether or not you utilize the services of an attorney.  You may obtain a Maryland advance medical directive online, from the office of the Maryland Attorney General, from a health care facility, or through an attorney.  What’s important right now is that you have an advance medical directive; that it is executed properly and is valid in the State of Maryland (if you are a Maryland resident); that it reflects the agents of your choice, along with their accurate contact information; that you have considered when your agent’s power is effective; and that you authorize the ability of your agent to change your stated preferences (flexibility) or not authorize such ability to deviate from your decisions.

Bottom line – an advance medical directive is an essential estate planning and health

care document at all times, but especially now during this world and national health crisis.  Your advance medical directive must be witnessed by two witnesses in accordance with Maryland law.  No notarization is required.  As I wrote in a recent blog, at this time of health care crisis, perhaps the most important and practical thing any person can do is to ensure that they have an advance medical directive and an understanding of MOLST (some states call this POLST).  An advance medical directive may be easily implemented in writing, orally, or in electronic form, and there is no requirement that it be notarized.  Access to information is easy and straightforward – for a comprehensive overview of Maryland Advance Medical Directives, alternative forms, health care decision making policy in Maryland, and MOLST, please follow these links:

 

https://mhcc.maryland.gov/mhcc/pages/hit/hit_advancedirectives/hit_advancedirectives.aspx

 

https://mhcc.maryland.gov/consumerinfo/longtermcare/AdvanceDirectiveInformation.aspx

 

https://www.marylandattorneygeneral.gov/Pages/HealthPolicy/AdvanceDirectives.aspx

 

Medical Order For Life Sustaining Treatment – MOLST – attorneys are generally not physicians, physicians’ assistants, nurse practitioners, or nurses, have little or no background in the medical field, and are not qualified to render medical advice.  So the following information is based on opinion and observation from the legal side – that aspect of estate, elder, and special needs planning that involves helping and counseling clients through the decision making process for health care decision making.  To begin this brief discussion, we’ll note a few basics:  the MOLST form is required in Maryland under certain circumstances – Maryland is one of only a handful of states that requires MOLST; the vast majority of Maryland residents are still not aware of MOLST, what it is, and what its purpose and function is, including persons who have been appointed as health care agents and are advocating for their principal; MOLST is ambiguous and its relation to the advance medical directive is confusing at best; how and when MOLST is implemented, and by whom, is mysterious to the individuals, health care agents, and the public; education for the public about MOLST is relatively limited and ineffectual; and the mechanism by which an individual may provide advance input or preferences – mainly, the Health Care Decisions Worksheet (or MOLST Worksheet) is virtually unknown to the public, including senior health care officials.  All this to say that because MOLST is required in Maryland, it must be considered as part of planning for health care decision making in Maryland.  Therefore, from a legal perspective, every person who executes an advance medical directive and all their appointed health care agents should have (arguably must have) at least a working knowledge of what MOLST is, its purpose and function, the circumstances under which it is implemented, how it may be changed, and more.  All persons, especially those over 60, should review MOLST and the Worksheet with their doctor and get advice about the function of MOLST and whether it is advisable to complete a Worksheet in advance, and how the Worksheet may become part of your medical record.

 

Wills and Trusts – beyond the important incapacity planning documents, it goes without saying that in general everyone should have a will (a Last Will and Testament) or a will substitute (a Revocable Living Trust), especially at this time of crisis.  Whether you use a will or a revocable living trust is not necessarily important, so long as you have provided for what happens upon your death for the disposition of your tangible personal property, any specific gifts or special provisions you may have, how the balance or bulk of your estate will be distributed (the residuary portion), and something that is perhaps of increasing importance given the health crisis, what happens to your property if there is a failure of distribution (your named beneficiaries are no longer living).  Yet with this said, an estimated 55% of people in the U.S. have no will or estate plan, with this percentage climbing as high as 62% for divorced persons, and as high as 80% for persons under the age of 44.  It’s important to remember that signing a will is easy, and there are many resources available today – via online methods and through traditional attorney representation.  What’s important to remember is that while estate planning has many definitions, it may boil down to something as simple as this:  estate planning is about disposing of your property to the persons or organizations of your choice, at the lowest possible cost.  It can be that simple.  Of course many times there are other considerations that add complexity, such as the additional incapacity planning provided by revocable trusts, special considerations for tangible personal property, how assets are passed along between spouses, marital protection, asset protection, tax considerations, and much more.  But sometimes, especially during a crisis, whether that be a personal health issue, aging, a special family circumstance, or the current health care crisis, what’s important is to implement a will or revocable living trust as soon as possible without delay.  I sometimes refer to this as “stop-gap” planning.  For these reasons, every Marylander should take the following action steps regarding Wills and/or Revocable Living Trusts:

(1) Locate your original current will or revocable living trust.  If you cannot locate your will, call the Register of Wills for your county to see if the will was registered, or contact the attorney who drafted the will;

(2) Review your will or revocable living trust carefully and determine when it was signed and that it is witnessed.  Many people have copies of older wills or revocable trusts that are unsigned;

(3) Review the will or revocable living trust further to determine whether it properly reflects your current wishes concerning how you wish to dispose of your property, including tangible personal property, real estate, and other non-retirement assets.  Also consider your retirement plan assets (IRAs and Qualified Plans) and check your beneficiary designations – are these correct and do they flow properly in accordance with your overall goals and planning?  Along these lines, check on the same for life insurance and non-qualified annuities.  Along these lines, review all assets and asset alignment, including the organization if digital assets;

(4) Review your selection of fiduciaries – your personal representatives and guardians under your will, and your trustees, independent trustees; investment and/or distribution advisors; and your trust protector(s).  Are these persons still available and appropriate to serve as your fiduciary?  Do you need to make any changes in selection or in the order they are to serve?  Consider whether you have provided for the flexibility or lack thereof that you desire;

(5) Determine whether changes are needed to your estate planning documents (including any memorandums of intent or letter of wishes), whether they be clear and obvious changes you wish to make, or those legal-technical changes resulting from the advice of your attorney (after review and recommendation by your attorney); and

(6) If you do not have a will or revocable living trust, it may be a practical necessity that you execute one as soon as possible.  As mentioned in this article, this is important whether or not you utilize the services of an attorney.  You may obtain a will or revocable living trust via a reliable online/electronic method, or through an attorney.

Bottom line – a will or revocable living trust are always essential estate planning documents, but especially now during this world and national health crisis.  For further guidance about the requirements of document execution and the practical problems presented by the need for social distancing, please refer to further information on our website at www.elvilleassociates.com.

 

Special needs trusts and/or other trusts may also need implementation or adjustment.  The same due diligence guidelines outlined above generally apply.

 

Although six-step processes like the ones outlined in this article are recommended for thoroughness, they can be time-consuming.  That’s why Elville and Associates pioneered the concept of Self-Directed estate planning through its Elville Self-Direct programs.  Through Elville Self-Direct, clients can expedite the implementation their wills, trusts, powers of attorney, advance medical directives, and other planning documents without sacrificing the client educational planning element Elville and Associates is known for.  This Self-Directed program includes:  client educational review of all estate planning documents including in-person review (or via telephone or videoconference), client exercises and homework, audio and video learning tools, coordination and collaboration with financial and tax advisors, and a family meeting.  Elville Self-Direct also incorporates our review of your current estate planning documents, whether or not those documents were drafted and produced by Elville and Associates.

 

At Elville and Associates, our attorneys and staff are committed to serving our clients, their families, and our communities by way of our caring for clients model and client legal education through counseling and superior legal-technical knowledge.  If you would like to set an appointment with Stephen Elville by way of video conference or telephone conference to discuss estate, elder law, or special needs planning issues, please contact Mary Guay Kramer at 443-741-3635, or via email at mary@elvilleassociates.com.

Tags: Coronavirus (COVID-19), elder law, estate planning, National Health Crisis, special needs planning
Posted in Blog | Comments Off on Practical Guidance for Estate Planning, Elder Law, and Special Needs Planning at a Time of World and National Health Crisis – Coronavirus (COVID-19)

By: Stephen R. Elville, J.D., LL.M. – President and Principal Attorney of Elville and Associates, P.C.

 

On March 7, 2020 at our recent Client Care Program continuing legal education event at Anne Arundel Community College, I stated that the SECURE Act, and the income tax ramifications it has for most of our clients (mainly, the acceleration of income tax to beneficiaries of inherited IRAs), is arguably the most important tax and asset protection issue clients have been presented with in the past 10 years. Before we go any further, amidst all the confusion there are, in my view, basically two main issues (or questions) clients and their families need to address.  They are:  (I) determine whether any changes need to be made to your estate planning documents (in consultation with your estate planning attorney); and (II) determine whether you wish to (or should) address the income tax and other impacts of the SECURE Act on your retirement plan assets, your non-exempt beneficiaries, and your estate plan as a whole, including the acceleration of income tax to your beneficiaries, loss of tax deferral to your beneficiaries, and potential loss of asset protection to your beneficiaries (in consultation with your financial advisor, CPA, and estate planning attorney).  If you can focus on these two main overarching issues (questions), I believe you can determine what to do about the new SECURE Act law (if anything) from an estate planning and income tax planning perspective, and act accordingly with minimal confusion or anxiety.  In the paragraphs below, I will try to help make sense of the SECURE Act, including what it is, who it affects, and who is exempt.  After all of this is summarily explained, I will recommend certain SECURE action steps for estate planning, tax planning, and financial planning, and then I leave you with some questions that only you will be able to answer, about SECURE and whether it represents anything positive despite its negative implications for many people.

 

Let us begin.  About seven months ago I wrote an article for this Newsletter describing the then vague prospect of the SECURE Act, proposed legislation that would constitute a series of expansions for individual participation in and contributions to retirement plans in the U.S., along with tax credits, incentives for businesses and individuals, changes to certain long-standing retirement plan-related policies, and the unfortunate elimination of the “stretch” IRA.  Introduced by way of two separate colossal proposals in early 2019 – one by the House of Representatives and one by the Senate – the then-proposed SECURE Act would change the length of time that non-exempt persons could defer income taxation upon their receipt of an inherited IRA from a plan participant.  Now the mere prospect of the SECURE Act has become a reality with broad-reaching implications.  The SECURE Act, signed into law on December 20, 2019 and effective January 1, 2020, now incentivizes employers to establish retirement plans for employees through small business tax credits, and eases the time limitations for employers to implement retirement plans; it removes age limitations for contributions to an IRA (beyond age 70-1/2), changes the required beginning date for minimum distributions from age 70-1/2 to 72, allows for the continuation of Qualified Charitable Contributions with certain adjustments, allows limited penalty-free withdrawals from IRAs ($5,000) for childbirth or adoption (Qualified Childbirth or Adoption Distribution), allows certain annuities to be investments in a 401(k) plan, and many more similar or related changes.  And yes, the now-effective SECURE Act exempts certain persons from the effects of the acceleration of income tax on retirement plan assets.  But SECURE is largely not favorable for estate planning clients who diligently saved retirement plan dollars throughout their lives and anticipated that the minimum distribution rules for beneficiary IRAs would continue to provide long-term tax deferral for children, grandchildren, nieces and nephews, and other beneficiaries.  So after much speculation, what was formerly described by me as a “ballistic missile red alert” but hopeful “false alarm” has now materialized as a full-fledged strike, a direct hit where the damage is similar to that of a neutron bomb – trillions of dollars of retirement plan assets will now be taxed on an accelerated basis, but with a remaining infrastructure, some old, some new, still standing in the aftermath.

 

The SECURE Act affects most estate planning clients by eliminating the “stretch IRA,” the ability for retirement plan participants to leave an IRA or Qualified Plan to their “designated beneficiary” (an individual or certain trusts) over a period of many years during which the beneficiary could, if desired, annually remove only the required minimum distribution from the inherited IRA and leave the balance of funds invested in a tax deferred status over a calculated life expectancy.  That is, SECURE affects most, but not all, plans.  Specifically, the SECURE Act affects any person who is a participant in a retirement plan and whose goal it is to provide for the lifetime stretch out of required minimum distribution payments to beneficiaries; and also persons who have beneficiary designated their retirement plans to a “conduit” trust for a beneficiary (a conduit trust is a trust for a retirement plan beneficiary that is designed to immediately pay out any required minimum distribution to the beneficiary).  Persons who are specifically not affected by the SECURE Act are those persons who do not have a retirement plan, and/or persons who plan to leave their retirement plan assets directly to charity at their deaths.

 

Under the old regime, there were two classes of beneficiaries for inherited IRAs: (I) designated beneficiaries (hereinafter referred to as (“DBs”) (those persons or certain trusts that qualified for life expectancy treatment for required minimum distribution purposes); and (II) non-designated beneficiaries (hereinafter referred to as (“NDBs”) (those persons, trusts, or entities such as an estate, that did not qualify for life expectancy treatment for required minimum distribution purposes).  Now under the new regime we have three (not two) classes of beneficiaries of inherited IRA assets: (a) Eligible Designated Beneficiaries (hereinafter referred to as (“EDBs”) – this is the new “preferred case” of retirement plan beneficiaries – persons who are eligible to continue stretching inherited IRAs – and then the old original classes of (b) DBs, and (c) NDBs. Probably the most confusing thing about SECURE is that much of the old law continues to be effective (notwithstanding several unanswered questions that will be clarified when the complete Treasury Regulations are eventually promulgated).  In any event, the following EDBs are exempt: (1) spouses; (2) minor children; (3) disabled persons as defined by IRC Section 72(m)(7); (4) chronically ill persons as defined by IRC Section 7702B(c) (2); and (5) persons who are not more than ten (10) years younger than the plan participant.  For all persons who are not EDBs (non-EDBs), the ability to stretch out the inherited IRA is now limited to ten (10) years.  So to reiterate, DBs, or ordinary “designated beneficiaries”, will no longer have preferred status and will have to take 100% of their inherited IRA funds no later than ten (10) years after the death of the plan participant; while EDBs, the new preferred class of beneficiaries so to speak, will be able to continue the lifetime stretch out of retirement plan assets – that is, so long as beneficiary designations are correct, and in the case of beneficiary designation to a trust, so long as the trust is drafted properly in accordance with the IRS Code and the Regulations.  The non-designated beneficiary class of beneficiaries (NDBs) remains part of the law and it is extremely important to consider that NDB treatment can still be triggered, even for EDBs.  One important point that is of concern to many clients and families with loved ones who are disabled or chronically ill – although we are still early in the SECURE environment, it is clear that properly drafted special needs trusts will qualify for treatment as EDBs for the protection of these individuals.

 

Is the SECURE Act the monster it has been described to be, or more of a friendly dragon, one that forces us to take a much closer look at retirement plan assets (savings) and how they are actually taxed (and remember, they all (retirement plan assets) are eventually taxed in some form, even for the person who contributes after-tax dollars to a Roth IRA or Roth 401(k))?  Doesn’t the SECURE Act potentially have a silver lining (maybe the government should have called it the Silver Act for all the older Americans it will impact), in that it will cause estate planning clients to examine the real outcomes of what happens to inherited IRAs after their deaths, and how they may be able to get ahead of the effects of SECURE by being proactive, thereby making a winning play in the end?  The answers may be “yes.”  After all, for example, it is generally better to die with a Roth IRA or Roth 401(k), and it is better to provide charities with the full benefit of tax-free contributions from retirement plan assets where the plan participant has genuine charitable intent, and other planning positives that can result after closer scrutiny.  So I will leave you to think about and answer these questions for yourself. But to properly do so, it will be necessary for most clients to consult with their advisory team – CPA, financial advisor, estate planning attorney, and in some cases, insurance broker.  Do this within the next 12 to 24 months, and you will be doing everything you can to address the estate planning and income tax ramifications of the SECURE Act.  Along these lines, there are several potential strategies available to address and deal with the effects of SECURE on your estate planning.  I will be available to address your questions and concerns, along with our estate planning team of attorneys, in coordination and collaboration with your Advisors.  Remember that any SECURE-related adjustments to your estate planning documents will be relatively straightforward, and Elville and Associates is currently reaching out to all clients to schedule update meetings.  We are also doing everything possible to keep you updated, provide action-related advice, educate you and your advisors, and collaborate in the solution process.  If you have not yet made an appointment for your SECURE Act update meeting, please contact Mary Guay Kramer via telephone at 443-741-3635 or via email at mary@elvilleassociates.com.

Tags: estate planning, Retirement Plan Assets, Secure Act, Tax Planning
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By:  Stephen R. Elville, J.D., LL.M. – President and Principal Attorney of Elville and Associates, P.C.

 

Over the past several days many people have asked “what is important right now regarding estate planning/elder law and the coronavirus?” Although there are many responses to this question, and I am releasing a new article on this subject in the next few days, my first reaction is always “incapacity planning.”  Going further, because there are several aspects of incapacity planning, let me be clearer and share my second reaction which is always “healthcare, health care decision making, and the advance medical directive.”  I’ll also add MOLST (the Medical Order For Life-Sustaining Treatment” to this list as a third reaction.  At this time of health care crisis, perhaps the most important and practical thing any person can do is to ensure that they have an advance medical directive and an understanding of MOLST (some states call this POLST).  An advance medical directive may be easily implemented in writing, orally, or in electronic form, and there is no requirement that it be notarized.  Access to information is easy and straightforward – for a comprehensive overview of Maryland Advance Medical Directives, alternative forms, health care decision making policy in Maryland, and MOLST, please follow these links:

 

https://mhcc.maryland.gov/mhcc/pages/hit/hit_advancedirectives/hit_advancedirectives.aspx

 

https://mhcc.maryland.gov/consumerinfo/longtermcare/AdvanceDirectiveInformation.aspx

 

http://www.marylandattorneygeneral.gov/Pages/HealthPolicy/AdvanceDirectives.aspx

 

Are you taking the time to think about this issue?

 

Stephen R. Elville is the principal and lead attorney of Elville & Associates, P.C., a leading estate planning, elder law, and special needs planning law firm in Maryland. Elville and Associates engages clients in a multi-step educational process to ensure that estate, elder law, and special needs planning works from inception, throughout lifetime, and at death. Clients are encouraged to take advantage of the Planning Team Concept for leading-edge, customized planning. The education of clients and their families through counseling and superior legal-technical knowledge is the practical mission of Elville and Associates. If you would like to set an appointment with Mr. Elville to discuss estate or elder law planning issues, you may contact him at 443-393-7696, or via email at steve@elvilleassociates.com.    #elvilleeducation

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By: Stephen R. Elville, J.D., LL.M. – President and Principal Attorney of Elville and Associates, P.C.

 

What’s important right now for your estate planning?  In short, three (3) things:  locate all original documents – wills, trusts, powers of attorney, advance medical directives, memorandums – and review them for accuracy and any needed changes; revise and update all documents that require changes or updating, and check/verify all asset alignment and beneficiary designations to ensure continuity of the plan; and lastly organize all your estate planning documents, financial documents and information, digital asset information, letter of wishes, memorandums or instructions, and any other information you deem pertinent to your plan and legacy.  Locate, revise/update, and organize.

 

Are you taking the time to think about your estate planning?

 

Stephen R. Elville is the principal and lead attorney of Elville & Associates, P.C., a leading estate planning, elder law, and special needs planning law firm in Maryland. Elville and Associates engages clients in a multi-step educational process to ensure that estate, elder law, and special needs planning works from inception, throughout lifetime, and at death. Clients are encouraged to take advantage of the Planning Team Concept for leading-edge, customized planning. The education of clients and their families through counseling and superior legal-technical knowledge is the practical mission of Elville and Associates. If you would like to set an appointment with Mr. Elville to discuss estate or elder law planning issues, you may contact him at 443-393-7696, or via email at steve@elvilleassociates.com.    #elvilleeducation

Tags: advance medical directives, estate planning, including the location, nationwide health crisis, powers of attorney, revision, trusts, updating of your will
Posted in Blog | Comments Off on Three Action Items That Are Important to You Estate Planning Right Now

[et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”4.16″ global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_row admin_label=”row” _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||” theme_builder_area=”post_content”][et_pb_text admin_label=”Text” _builder_version=”4.22.0″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″]By: Stephen R. Elville, J.D., LL.M. – President and Principal Attorney of Elville and Associates, P.C.

The process of estate planning is confusing and ambiguous for some people, and a real obstacle for others. No one really enjoys sitting down and discussing end-of-life issues or incapacity issues, let alone the sharing of personal information with a stranger, not to mention the mystery of the actual process of going to an attorney‘s office. So let’s get something out of the way right up front. Discussing your estate and in capacity planning is not fun. But it can be rewarding.

The first step in the process is to understand that there is nothing to fear, and one benefit of engaging in a comprehensive estate planning process is the peace of mind, clarity, and certainty that results. Now, during these challenging days, the issue of process in estate planning has taken on a new meaning and dynamic. Many couples and individuals simply want to implement their estate plans as soon as possible.

To address this concern, Elville and Associates is responding by emphasizing its self-directed programs for wills, trusts, powers of attorney, and advance medical directives – the same dual-track planning approach that has benefited our clients for the past 10 years. In short, this is what it is: for persons who wish to implement an expedited estate plan – to put wills and trusts and incapacity planning documents in place as soon as possible, our estate planning and elder law departments will initiate the drafting and implementation of estate planning documents on an expedited basis, utilizing all available tools and technology. This kind of planning can be viewed as interim or stop-gap measure planning, and for some people this will represent their complete planning package.

Beyond this, the second track of the self-directed approach is the continuation of client education and knowledge. Once the interim plan is executed and immediate concerns have been addressed, the important educational process for clients can continue until completion. In many cases this will include the re-execution of certain documents that address a broader, more comprehensive plan that then replaces the initial temporary plan. In summary, do not be apprehensive or fearful of the estate planning process. Instead, embrace the process and envision the peace of mind that comes from comprehensive planning that is education based. Elville and Associates is committed to meeting the estate planning needs of couples and individuals during this time of crisis and beyond through the use of its leading-edge legal-technical knowledge, technological resources, and client education-based platform.

Stephen R. Elville is the principal and lead attorney of Elville & Associates, P.C., a leading estate planning, elder law, and special needs planning law firm in Maryland. Elville and Associates engages clients in a multi-step educational process to ensure that estate, elder law, and special needs planning works from inception, throughout lifetime, and at death. Clients are encouraged to take advantage of the Planning Team Concept for leading-edge, customized planning. The education of clients and their families through counseling and superior legal-technical knowledge is the practical mission of Elville and Associates. If you would like to set an appointment with Mr. Elville to discuss estate or elder law planning issues, you may contact him at 443-393-7696, or via email at steve@elvilleassociates.com. #elvilleeducation[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Tags: estate planning
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By Stephen R. Elville, J.D., LL.M. — Principal and Lead Attorney of Elville and Associates, P.C.

Beneficiary designations can make or break an estate plan. Without proper and accurate beneficiary designations, retirement plan assets can flow in unintended ways causing many potential problems including, but not limited to, the following: loss of lifetime stretch out of required minimum distributions for new class of eligible designated beneficiaries under the SECURE Act; for married persons, inefficient use of the new 10-year rule under the SECURE Act due to the “spousal rollover trap”; loss of designated beneficiary status or eligible designated beneficiary status; triggering of the five-year default rule whereby all plan assets must be withdrawn and taxed within five (5) years – this means that for all practical purposes the entire IRA or qualified plan is taxed immediately; failure of the plan assets to reach and fund important spendthrift trusts for spouses, children, grandchildren, nieces and nephews; failure of your retirement plan assets to reach intended charitable beneficiaries tax-free; and more. Risking failure of your estate plan and/or the acceleration of income tax on your retirement plan assets is just not worth it. Check your retirement plan beneficiary designations today, in consultation with your financial advisor, estate planning attorney, and CPA. Hopefully you will find no surprises. And if you do, you’ll be glad you performed a check up.

Are you taking the time to think about this issue?

Stephen R. Elville is the principal and lead attorney of Elville & Associates, P.C., a leading estate planning, elder law, and special needs planning law firm in Maryland. Elville and Associates engages clients in a multi-step educational process to ensure that estate, elder law, and special needs planning works from inception, throughout lifetime, and at death. Clients are encouraged to take advantage of the Planning Team Concept for leading-edge, customized planning. The education of clients and their families through counseling and superior legal-technical knowledge is the practical mission of Elville and Associates. If you would like to set an appointment with Mr. Elville to discuss estate or elder law planning issues, you may contact him at 443-393-7696, or via email at steve@elvilleassociates.com. #elvilleeducation

Tags: estate plan, Proper Beneficiary Designations
Posted in Blog | Comments Off on The Tremendous Importance of Proper Beneficiary Designations in Your Estate Plan

Successfully addressing and legally formalizing inheritance of family values and assets can be challenging, especially if parents wait too long to begin instilling family values. Undoubtedly the best time to teach and empower your children as eventual inheritors of your family legacy is during childhood, then continuing throughout adulthood. Waiting until your later stages in life to discuss family values as a guide to handling inherited worth is often ill-received as grown adult children prefer not to feel parented anymore, particularly when they are raising children of their own.

There is value in the spiritual, intellectual, and human capital of rising generations, and it is incumbent upon older generations to embrace this notion and work with their heirs rather than dictating to them their ideas about how to facilitate better outcomes. While the directions taken by newer generations will likely differ and can sometimes be downright frightening than that of their elders, there can still be a deep sense of service and responsibility to family values and stewardship of inherited wealth. Allow your children to exert their influence over the family enterprise early on in life and make adjustments that create synergy, connection, and like-mindedness.

If this description of a somewhat ideal family system does not resemble yours, take heart. Most families do not conform to perfect standards of interaction. The more affluent a family is, the higher the failure rate to disperse assets without severe fallout. The Williams Group conducted a 20-year study and determined there is a 70 percent failure rate that includes rapid asset depletion and disintegration of family relationships during and after inheritance. Establishing inheritable trusts can provide real benefits. Benefits include avoiding probate, reducing time to handle estate matters, privacy protection, the elimination or reduction of the estate tax, and can be effective pre-nuptial planning. A parent who wants to control outcomes should focus on these benefits of the trust instead of trying to legislate their future adult children’s behavior.

It is imperative not to allow your values and legacy to become weaponized within the family system. A sure-fire way to inspire conflict is via “dead hand control,” meaning trying to control lives from the grave. Most often, if you put excessive trust restraints on adult children, they will act accordingly to your perception that they are not adult enough to handle wealth. Instead, consider enrolling them in a few classes about managing wealth. Spark an interest in them to learn how you have created wealth, the mechanisms you used, and what their future endeavors may look like long after you are gone. Formally educate your children about finances, the earlier the better, and instead of talking about who gets what the conversation can shift to the mechanics of managing wealth. This tactic resets the context of the issue and aligns purpose and intended long term outcomes.

Estate planners try to encourage trust choices that lead to flexibility. If a beneficiary is genuinely incapable of making the right decisions, a trustee can be appointed to make distributions in the beneficiary’s best interest. This trustee discretionary power of money management can help a well-funded trust survive for generations.

You can also write a letter of wishes or provide a statement of intent to your children. Though these are not legally binding, it gives you a platform to remind them of family values and your desire for these values to be maintained for future family generations. This type of letter is an opportunity for you to convey your vision for how your wealth can bring growth and chance for fulfillment to beneficiaries.

Prosperity should positively shape lives. Family trust beneficiaries hopefully already have a self-driven life that includes purpose, responsible behavior, and a basic understanding of personal finance. If you worry your children may squander inheritable assets, create the opportunity for them to succeed through classes that teach them about managing legacy family values and wealth. Address your concerns legally and directly through a detailed trust that can help but not overly constrain them to achieve what you envision they can become. Start an honest conversation early on, but remember it is never too late to make good choices and create positive family value influences for the coming generations. A well-known Ann Landers quote sums it up neatly, “In the final analysis it is not what you do for your children but what you have taught them to do for themselves that will make them successful human beings” – a worthy goal of any family value system.

If you are interested in establishing a trust to pass wealth on to your children, we can help. We can also guide families on how to pass on family values in a meaningful way.

If you have questions or need guidance in your planning or planning for a loved one, please do not hesitate to contact any one of our five office locations by calling us at (443) 393-7696.

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Parkinson’s disease is a neurodegenerative disorder that causes a progression of symptoms including, body tremors, limb rigidity, Bradykinesia (slow movement), as well as balance and gait problems. The cause of Parkinson’s disease (PD) remains largely unknown. One well-known indicator of PD is the dying off of predominately dopamine-producing neurons (dopaminergic) in a particular region of the brain. While the disease is not itself considered to be fatal, serious complications can occur. The Center for Disease Control and Prevention (CDC) lists complications from Parkinson’s disease as the 14th leading cause of death among Americans. Official estimates for 2020 estimate that approximately 930,000 people age 45 or older will be living with the disease.

Current Biology has recently published a comprehensive new study that explores the root cause of Parkinson’s disease and looks to develop disease modification therapies instead of the pharmacological treatment for the disease’s symptoms. Current therapies include dopaminergic medications to replace missing dopamine or increase low levels of dopamine in the brain. All pharmacological therapies to date only improve PD symptoms but are unable to slow or halt the disease progression, and long-term use of these medications can lead to serious side effects.

Prevailing notions about the key biological mechanisms of Parkinson’s may be overturned as motor symptom degeneration may occur because of brain changes far earlier than researchers had previously surmised. Lead researchers C. Justin Lee, Ph.D., Hoon Ryu, Ph.D., and Sang Ryong Jeon, in conjunction with other colleagues, all in South Korea, identified that symptoms of the disease appear before the premature death of the dopamine-producing neurons. What the researchers found is that dopaminergic neurons cease to function properly before they die off. While the effect is the same, symptoms associated with Parkinson’s, the biomarker shift is profound.

Surrounding astrocytes (star-shaped non-neuronal cells) in the same region of the brain show an increase in number as the local neurons begin to die off. A key chemical messenger, known as GABA, also starts to increase its levels in the brain. GABA is what stops the dopaminergic neurons from producing dopamine; however, it does not kill them. Parkinson’s disease mechanisms, in its earliest stages of brain change, can allow for dormant neurons to be awakened, and they can resume the production capability of dopamine. The stopping of astrocytes from synthesizing excessive GABA decreases the severity of motor symptoms.  Theoretically, addressing Parkinson’s at this early stage can prevent neuronal death of dopamine producers and prevent the disease from occurring at all. This theory is no less than a weighty shift from responsive pharmacological therapy treating symptoms to disease modification or possibly eradication at its root cause.

Disease-modifying treatments become more prevalent as our ability to advance our understanding of the human brain mechanisms increases. Researchers who are capable of rethinking traditional disease model understanding are at the forefront of this disease modification trend. Sang Ryong Jeon, “However, this research demonstrates that functional inhibition of dopaminergic neurons by surrounding astrocytes is the core cause of Parkinson’s disease. It should be a drastic turning point in understanding and treating Parkinson’s disease and possibly other neurodegenerative diseases as well.”

This study advances our understanding of the underlying brain activity that triggers Parkinson’s and gives hope that better treatments will be developed. Changing the point at which medical identification and intervention for disease modification are crucial to eradicating Parkinson’s. Until such time, current pharmacological therapies must remain in place for those people currently afflicted with PD as once neuronal cells die off, scientists have no way of switching it back to life.

We help families who have loved ones with serious health conditions, like Parkinson’s’. It’s important to have a comprehensive estate plan that covers long term care issues as well as payment options for care. Please get in touch with any of our five offices by giving us a call at (443) 393-7696 if you’d like to discuss your situation and how we can help.

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Estate planning for the future inheritance of your children and grandchildren should include protective measures to keep assets from disappearing or being claimed by a creditor.  A simple way to achieve inheritance protection is through a trust. A trust can pass your wealth bypassing probate. This allows specific trust provisions to ensure the money left to a beneficiary is neither squandered or through ill-advised spending or divorce action of the beneficiary.

Divorce is one of the primary obstacles to contend with when trying to minimize issues of wealth transfer and preservation. High divorce rates, especially among aging Americans, can make an inherited trust vulnerable if the property becomes commingled with the marital estate. Single and married children, as well as grandchildren of inherited wealth, should always maintain inherited assets and property as a separate entity whether as a trust or direct individual inheritance. Before any marriage, a pre-nuptial agreement should be signed to protect previously inherited wealth and the potential of future inheritance.

Weforum.org

Whether your child or grandchild inherits an existing trust or establishes their trust after a direct bequeath, the terms of the trust can limit the potential problem of future loss of inherited monies or assets due to the possibility of lawsuits and creditor claims. A properly drafted trust can protect assets from legal action in the event your child is sued. A trust also protects the trust maker and the beneficiaries from the public process of probate. Anyone can research probate court records and determine how much your estate was worth, what you owned and how you chose to divide it.

If you believe your adult child has limited aptitude to manage money properly and might squander your grandchildren’s inheritance, then draft a will or trust that earmarks a dollar amount or percentage of the estate for those grandchildren explicitly. As an example, the will or trust can also specify that these inherited assets be allocated solely for a grandchild’s college education or wedding.

Another financial vehicle with some overspending controls is a “stretch IRA.” This inherited individual retirement account (IRA) has a required minimum distribution (RMD) that stretches over a more extended period based on the inheritor’s life expectancy. A monitored minimum distribution will allow the principal to continue growing. In the case a child or grandchild is too young to manage the RMDs it may be in their best interest to name an institutional trustee to direct distributions.

Whatever your intent is for your grandchildren, be sure to include a discussion with your child, expressing your resolve for your grandchildren to inherit and clearly stating them in your will. Also, speak honestly about your fears that your child may blow through their inheritance and discuss the value of limiting annual distributions to only investment income or a percentage of the trust’s value to preserve the aggregate of assets. In the event your child, who may have an addiction problem like gambling, drugs, or overspending, may require trustee oversight to temporarily end the distribution of trust or IRA monies until they demonstrate wellness. At that time, the trustee may opt to restart money distributions.

Ultimately it is best to find a trusted estate planning attorney that is well versed in the laws of your state to help you craft a comprehensive approach to the dispersion of your estate that will protect your intentions from the mal-intent of others. Whether you need a lifetime “dynasty” trust, individual trust or direct inheritance, institutional trustee, inheritable stretch IRA, or a combination of inheritance vehicles, is all dependent on your unique financial position and personal desires for your legacy’s distribution. There is great latitude when drafting the structure for the distribution of your estate, so look to creative inspiration to open up possibilities.

If you have any questions or need guidance in your planning or planning for a loved one, please don’t hesitate to contact any one of our five offices by calling (443) 393-7696.

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The astronomical expense of long-term nursing care is no longer news. Costs can run around $7,000.00 or more per month, depending on location. Hundreds of thousands of people presently need that kind of care and the numbers are rising. Ten thousand “baby boomers” a day turn 65, and it’s projected that seven of ten of those people will need long-term care.

By astute financial planning, our law firm reduces or eliminates the impact of such phenomenal costs on many families’ life savings. But many others who are not our clients pay and pay until they simply run out of money. The Medicaid program is available to step in and pay, but it is questionable how long that program can continue in its present state. For 2018, Medicaid spending was at $597.4 billion, according to the Centers for Medicare and Medicaid Services. Policy-makers are looking for other alternatives.

One option is to require adult children to pay for the cost of their parents’ care. This obligation can be imposed through “filial responsibility” laws. Around thirty states have enacted these laws, some of which even impose criminal fines and imprisonment if an adult child is able, but fails, to pay. 

In Pennsylvania in 2012, a son whose mother owed $93,000 to a nursing home was held liable for her bill under that state’s filial responsibility law. The case is Health Care & Retirement Corp. v. Pittas, available here.

The rationale for such laws is that parents supported children for many years and the children owe a debt of gratitude: they should return the favor when parents grow old and become unable to provide for themselves. Such laws are supposed to motivate children to exert pressure on parents, to ensure that long-term care planning is done before the children are called on to pay.

There are numerous objections to this kind of law. Children may resent being forced to pay and treatment of the elderly may suffer as a result. The laws differ widely across the states and produce inconsistent results. Courts may not have the power to enforce these laws against children who live in disparate states. Filial-responsibility laws provide no protection for seniors who have no children.

Further, federal law currently prohibits nursing homes from demanding payment from funds other than those belonging to the resident – like a child’s money.

Other alternatives are more-wisely designed to care for elderly people at home, to delay the need for institutional care for as long as possible. In-home care is estimated to cost one-third the amount of institutional care. Further, personal care can be more suited to the individual if it is given by family and community caregivers. The emotional benefit to the elder can be incalculable.

The need for such programs has been recognized by the Affordable Care Act, which greatly expanded options for states to increase funding for home- and community-based services. Additionally, there are HUD funds available for projects like ECHOs (elder cottage housing opportunity units) – “granny cottages,” small houses for the elderly on a child’s property, to keep family help close by. A 2003 study on the results of that program is available here.

Additional tax deductions and exemptions, like those already allowed in the Medicaid rules, could provide more incentives for at-home improvements like wheelchair ramps and grab-bars. Easing qualifications for long-term care insurance deductions could be encouraged. Family and medical leave from employment could become more available, to relieve the caregiving burden that currently rests disproportionately on women and low-income workers. Subsidies to community elder-care services could be beefed up.

The problem of paying for elder care is multi-faceted and should be tackled on numerous fronts. The options other than filial-responsibility laws seem better-advised to relieve the Medicaid program from the stresses it faces now and into the future.

If you have any questions or need guidance in your planning or planning for a loved one, please don’t hesitate to contact one of our five offices by calling (443) 393-7696.

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