Estate Planning

The Dark Side of Longevity

Historical census data has shown that in the U.S. in 1900, 100,000 people were age 85 and over. In the year 2000, this age group numbered 4,239,587. In 2020, the number will be 6.5 million, and in 2050, it will have grown to 17,970,000!

Clearly, people are living longer today, in greater numbers, than they ever have (disregarding Methuselah of course!) throughout recorded history. Our medical care providers have succeeded in keeping us alive for much longer than they have in the past. As wonderful as this medical technology is, it has not come without costs. With that longevity comes a host of other problems.

Special Needs Planning Issues Following Divorce

Divorce can be complicated, frustrating, disappointing, expensive, along with a whole range of other emotions, as anyone who has endured this type of proceeding can attest. As difficult as the issues can be in a divorce proceeding, can you imagine what happens when divorce involves a child with a disability?

We will focus on one case study to illustrate how much more difficult the issues can be when a child with a disability is involved in the marital split, and how important it is to have someone knowledgeable in government benefits and special needs planning issues participate in the proceedings.

The Facts
Consider the following situation: Husband and wife divorce in 1996, when their child, who is disabled, was 4 years old. The husband was ordered to pay approximately $2,800 per month in child support (considered to be about three times an ordinary child support order based upon his assets and income) for the life of the child. While it is unusual to see lifetime child support payments, and the award was larger than is customary, the husband agreed to this primarily because of the guilt he felt around the divorce. He also knew that his daughter was disabled and would require as much help as possible.

Winehouse Had Her Legal House In Order

I’ve briefly discussed the case of the late Amy Winehouse before. She was young, very talented, and had found financial success and notoriety as an R&B singer. Here’s a great video of one of her performances in case you’re not familiar with her.

In the past, I’ve pointed out times when celebrities have really dropped the ball when it came to estate planning. And more often than not, when an estate plan fails big, it’s not that an estate plan was never done, it’s that an estate plan WAS done, but it was out of date or did not reflect the current wishes of the deceased individual.

How Not to Lose $45,000

I'll be the first to admit that today's financial times are a bit scary. And inevitably, when people begin to worry about their investments, I get lots of questions from clients about whether they should just pull all of their money out of the banks and buy gold and silver, or just bury the cash somewhere in their backyard.

Of course, I'm not a financial advisor so I typically will defer to the advice of my client's own advisors on matters such as these. However, being an estate planning attorney, I have had occasion to witness the sometimes disastrous results of people following this course of action. Two quick examples:

I Had Lunch With The Governor Today

It's true. I did have lunch with Gov. Herbert today. It's also true that about 50 other people had lunch with him. He spoke today at the Lehi Area Chamber of Commerce monthly luncheon on the economic development of Utah. I've been a member of the Chamber for about a year now and I am very excited about the growth that is coming to the State of Utah, and specifically, the growth that is coming to North Utah County. Gov. Herbert recited a litany of encouraging statistics and rankings all supporting the idea that Utah is truly one of the most economically promising states in the nation.

This One Simple Tip Can Save You Thousands

Last week I had a client contact us in a panic because her daughters had told her "Mom, if you die, the government is going to tax you 50% of everything that is in your bank account!" They further explained that she should probably start giving away her money to children and grandchildren now while she was still alive in order to avoid this tax.

Now I know this family well enough to feel comfortable that these daughters were not trying to exploit their aged mother. However, this experience highlighted to me a problem that I see very often in my practice. The federal and state laws that govern taxation are extremely complex and are in a constant state of evolution. Just when we start to get a handle on how our families or our businesses are going to be taxed, we find out that the rules have changed.

The Future of Medicaid and Medicare

In May, we reported about the federal government’s efforts to decrease spending in 2011 by making sweeping cuts to numerous federally funded programs to avoid a government shutdown. Four months later, the focus on cutting Medicaid and Medicare benefits has gained momentum, despite documented evidence of the many benefits of Medicaid, as well as the huge detrimental impact cutting either program can have on individual states.

Proposed Cuts

As has been widely reported, the Obama Administration is offering to cut tens of billions of dollars from Medicare and Medicaid as part of the negotiations to reduce the federal budget deficit. The depth of the cuts depends on whether Republicans will accept any increases in tax revenues.

It appears that hospitals and nursing homes will be the unwilling recipients of some of the cuts, as Administration officials and those involved in the negotiations say that the cuts can come from health care providers like hospitals and nursing homes without directly imposing new costs on needy beneficiaries or overhauling either program. Some of the proposals being considered are:

• Gradually eliminating Medicare payments to hospitals for uncollectible patient debt. Medicare currently reimburses hospitals for 70% of debt resulting in patients failing to pay deductibles and co-payments and the hospitals have made reasonable efforts to collect.

• Reducing Medicare payments to teaching hospitals for the cost of training doctors, caring for sicker patients and providing specialized services such as trauma care and organ transplants.

• Reducing the federal share of payments to health care providers treating low-income people under Medicaid and the Children's Health Insurance Program.

Lawmakers opposed to the cuts say it would impair access to care for the poor and shift costs to the states that are already facing a huge expansion in Medicaid eligibility and enrollment beginning in 2014 under the terms of the health care reform legislation passed last year. Hospital executives say that additional cuts (besides the reduction in Medicare payments already part of the health care reform legislation) will result in hospitals discontinuing services and increasing charges to patients with private insurance.

Honey, Did You Unplug the Iron?

Have you ever taken a family trip somewhere and at the last moment, as you're driving away from the house or sitting on the airplane waiting for it to take off have that momentary panicky thought "What if something bad happens on this trip? Are all of our affairs in order?"

My family went to Lake Powell last week for a summer vacation. We look forward to this trip all year, but each time we pack up the car, that same thought pushes its way into the front of my mind. Would everything be okay if I never came home? Yes, even estate planning attorneys have to worry about making sure their estate planning is up to date.

So last week, as we prepared for our trip, Melissa and I reviewed our documents to make sure that those we've named in positions of trust in our documents were still the people who we would want to serve in those roles. We reviewed our insurance policies and the beneficiary designations on those policies. We made sure our documents were located somewhere that our family members could find them easily if they needed to. And we made sure that our business succession plan was up to date to ensure that our clients wouldn't suffer if we could no longer continue as their attorneys.

It's Not If. It's When.

A couple of weeks ago I was invited to sit on a panel of Elder Law attorneys up at the Utah Law and Justice Center in Salt Lake to speak to the public about the legal issues that most commonly face aging individuals. One of the audience members asked the question, "How much does it cost to work with an attorney to get this kind of planning in place?"

One of my colleagues responded to the question by explaining that it can vary widely depending upon your specific circumstances (amount of wealth, types of assets, family dynamics, and how it is you would like to see your estate inherited by the beneficiaries). But the portion of his response that struck me the most was this:

Put the Fun in Funding

The other day, my wife went over to her grandparents' home to help them make sure their trust was properly "funded." After her visit, she shared with me her grandparents' confusion about the funding process because they thought "everything was all taken care of" when they signed their trust document. This is such a common misunderstanding that I thought the topic of funding was worth revisiting today.

What Does It Mean to Fund a Trust?

Funding is the process of transferring ownership of assets from your individual name into the name of your trust (or making your trust a beneficiary of beneficiary-designated assets). The terms of your trust agreement will only control property that is actually owned by your trust. This is why funding a trust is just as important as setting it up.

I like to use the bucket analogy. Think of your trust as a bucket. Your trust document contains instructions on what to do with the things in the bucket. Funding is simply the process of putting things into the bucket.

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