Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

A Member of the Law Professor Blogs Network

Friday, May 22, 2015

Common Estate Planning Mistakes That People Need To Avoid

Plan aheadA large number of people often make estate planning mistakes.  Kyle E. Krull, an attorney involved in estate planning, wrote about his own embarrassing experience of forgetting to prepare a durable power of attorney for a loved one when he was a young captain in the U.S. Army.  Mr. Krull wants more people to become aware about the need to plan ahead.  He suggests that people update their wills, trusts, powers of attorney, and healthcare directives every five years or whenever a major life event happens.  Not planning ahead can lead to consequences if something unexpected happens to a loved one. 

See Kyle E. Krull, Avoiding Estate Planning Gotchas, Wealth Management, May 19, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

May 22, 2015 in Death Event Planning, Disability Planning - Health Care, Disability Planning - Property Management, Elder Law, Estate Planning - Generally, Trusts, Wills | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 20, 2015

The ABLE Act Has Some Drawbacks

Able actI have previously discussed the ABLE Act, which allows for the creation of a trust to help pay for the expenses of a person with a disability without disqualifying that person from receiving government benefits.  As of now there are eleven states that have enacted the ABLE Act and another six states with pending legislation.  In order to benefit from the law a person would need to live in a state that has enacted the ABLE Act.

One problem with the ABLE Act is a Medicaid recovery procedure called a “clawback.”  If a person with a disability who received Medicaid benefits dies with money still left in their ABLE account Medicaid will be able to make a claim to that account through its clawback option.  Some families might prefer setting up a traditional special needs trust as an alternative to using an ABLE account.  The ABLE Act is still a good idea for people with disabilities who want to save for themselves without risking the loss of government benefits.

See Liz Weston, The Limitations Of ABLE Accounts For The Disabled, Reuters, May 18, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.      

May 20, 2015 in Current Affairs, Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, May 11, 2015

The ABLE Act Provides New Alternatives to Help With Disability Planning

ABLE1 I have previously discussed the ABLE Act, which provides a vehicle for families to save for the future care of their loved one with a disability through an account made available by similar legislation for 529 plans. One of the greatest benefit's of ABLE's passage is that it brings awareness to the importance of saving for a disabled child.  An often overlooked issue affecting families with special needs children is saving for the future without jeopardizing eligibility for supplemental security income benefits.  A person can often be disqualified from receiving these government benefits if they put more than $2,000 into a savings account. 

There have been two traditional methods of handling this situation.  One is creating a special needs trust.   A first-party special needs trust is good for people with large sums of money, but it is impractical for people wishing to invest smaller amounts because of the costs of creating and managing the trust.  Another method is a “Medicaid spend down,” which involves buying items necessary in order to get the balance of their account below the $2,000 threshold; yet, this remedy can often be wasteful.  The new ABLE accounts will hopefully provide a better alternative investment strategy.

See John W. Nadworny, Incorporating the ABLE Act into Special Needs Planning, Journal of Financial Planning, May 2015.  

Special thanks to Jim Hillhouse for bringing this article to my attention.

May 11, 2015 in Disability Planning - Property Management, Estate Planning - Generally, Trusts | Permalink | Comments (0) | TrackBack (0)

Tuesday, May 5, 2015

Talking to Older Clients

Older clientsBecause senior clients are likely to have memory comprehension and other health issues, clearly communication financial planning concepts can be a challenging task.  Regardless, it is important to convey this information, and provided below are some of the best ways to go about doing so:

  • Keep it simple.  Do not overwhelm clients with mountains of paperwork they will not read.  Instead, offer them summaries that they can understand.  Break down complex topics into several parts and pause at the end of each part to recap what has been covered. 
  • Minimize distractions.  Try to plan meetings for when older clients are most alert.  For seniors, this is typically early on in the day.  Advisors can also help to focus concentration by eliminating office distractions.  “A calm, neutral but welcoming, setting works best.”
  • Working with women.  Take into account an older client’s gender since the majority of surviving spouses are women and their outlooks are generally different from that of their male counterparts. 

See Paul Hechinger, Better Ways to Talk to Older Clients, Financial Planning, May 5, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

May 5, 2015 in Disability Planning - Property Management, Elder Law, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Monday, April 27, 2015

Bank Personnel at the Front Line of Elder Abuse Detection

Scam1Older individuals are susceptible to financial abuse due to either declining cognitive abilities or out of heightened financial need. Some scams take advantage of the elderly that are on a limited budget and need additional income, by promising to be a money making opportunity. Others take advantage by furthering the fraudulent scheme through a form that looks like an official bill.

At the front lines of of defending against financial elder abuse are bank tellers. A warning sign can be the account being overdrawn and the bank employee can alert the individual that someone is taking advantage of the account.  Tellers can also be the first to notice declining cognitive ability and inability to understand their finances, and can then inform the person of help available to them or contact an appropriate resource for them. With proper training, bank personal can act as an important protection for the elderly against financial abuse.

See Erin Rhoda, The Frontlines of Elder Exploitation, Bangor Daily News, Apr. 2015.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

April 27, 2015 in Disability Planning - Property Management, Elder Law | Permalink | Comments (0) | TrackBack (0)

Sunday, April 26, 2015

Ask Math Not Facts to Detect Cognitive Impairment Early

MathResearchers of dementia and cognitive impairment warn that many individuals can still recall common facts, such as the date or who the president is, in the early stages of impairment. However, losing ability to do simply math and understanding finances can come earlier in the development of diseases such as  Alzheimer's. Detecting declining ability to handle finances early can help protect older individuals from exploitation.

See Tara Siegel Bernard, As Cognition Slips, Financial Skills Are Often the First to Go, New York Times, Apr. 24, 2015.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

April 26, 2015 in Disability Planning - Health Care, Disability Planning - Property Management, Elder Law | Permalink | Comments (0) | TrackBack (0)

Thursday, April 23, 2015

Incapacity Planning

Healthcare proxySome of the lesser-known benefits of a well-crafted estate plan are the provisions providing for both management of assets and instructions for personal care in the event of incapacity.  Estate planning documents that anticipate incapacity enable named representatives to manage an individual’s assets, and direct how health care decisions will be made.  Without these documents, family members may have to petition a court to attain power to manage the assets or make health care decisions for one who is incapacitated. 

The first document necessary in planning for incapacity is the durable power of attorney.  This document survives incapacity and gives a designee the authority to act on one’s behalf with regard to financial affairs.  The durable power of attorney is valid once the testator signs it, so selection of designee is imperative.  The next set of documents concerns heath care; and includes a health care proxy, living will and HIPAA authorization.  A health care proxy will give a designee the power to make health care decisions on one’s behalf.  A living will or advance directive can provide directions to caregivers and loved ones with regard to care or end-of-life matters.  A HIPAA authorization allows doctors to disclose important health information to caregivers. 

See Planning for Incapacity re: Estate Planning, The National Law Review, Apr. 23, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

April 23, 2015 in Disability Planning - Health Care, Disability Planning - Property Management, Estate Administration, Estate Planning - Generally, Wills | Permalink | Comments (0) | TrackBack (0)

Saturday, April 18, 2015

Importance of Reviewing Powers of Attorney Gifting Provisions

EditPowers of Attorney are often drafted using boilerplate language. However, with the now $5.43 million Federal estate tax exemption, many Powers of Attorney may need to be revised in the way they address gifts made by agents. Prior to the increased exemption gifting by agents was more beneficial, but now it is likely not needed or can be exploited as has been seen by the increase in financial elder abuse. Even for individuals that still need estate tax considerations included in their Powers of Attorney, reviewing and individualizing the directions for how gifts should be made can be beneficial.

See Martin Shenkman, Do Powers of Attorney Need New Gifting Rules?, Financial Planning, Apr. 14, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

April 18, 2015 in Disability Planning - Property Management, Estate Planning - Generally | Permalink | Comments (0) | TrackBack (0)

Friday, April 3, 2015

Fox Drama Covers Serious Estate Planning Issues

TVThe popular drama-filled television show Empire just finished its first season and has been renewed for a second season on Fox. The show's plot includes deeply rooted estate planning themes. The show follows father and entertainment mogul Lucious Lyon as he faces a terminal illness and must begin succession planning for his business by choosing between his three sons.

See David H. Lenok, Empire: The Best Estate Planning Drama on TV, Wealth Management, Apr 2, 2015.

Special thanks to Jim Hillhouse for bringing this article to my attention.

April 3, 2015 in Disability Planning - Property Management, Estate Planning - Generally, Television | Permalink | Comments (0) | TrackBack (0)

Monday, March 30, 2015

Planning Ahead for Special Needs

Special needs 2

Planning for family members with special needs can be overwhelming, especially when so many decisions may have lifelong consequences.  Not only must parents untangle the intricacies associated with government programs, but they must also understand guardianships, legal documents and the like.  Below are some tips for families beginning to plan for individuals with special needs:

  • Getting Started.  When you need to budget for another person, saving for retirement becomes even more difficult.  You may need to take precautions that money set aside for your child will not be consumed by long-term care expenses for you or a spouse.  Many families supplement what Medicaid provides by putting money into a special needs trust, and those funds can be used to help pay for the individual’s expenses without jeopardizing government benefits. 
  • Utilize New Tools.  The ABLE or 529A account, is a tax-advantaged savings vehicle that make it much less costly to create a special needs trust.  These accounts are likely to be attractive for disabled people who work and want to save more than $2,000, or for families who need a place to deposit gifts or inheritances from family members.  Once the account exceeds $100,000, the individual’s benefits will be cut off, although Medicaid is not affected. 
  • Trusts.  While there are several types of special-needs trusts, “third party” trusts are frequently used by families who want to supplement what the disabled person receives through government-run programs.  The trusts can sit for years, families can add money over time, or they can fund them with life insurance and estate proceeds.  Pooled trusts are also an option for families with less money or little family to help oversee the process.
  • Guardians.  Families struggle when it comes to considering whom to appoint as a guardian to look after their child, as well as who will serve as a trustee to oversee any trust accounts.  Some experts suggest splitting roles to build in a system of checks and balances: Have a guardian who will advocate for the individual, and a separate trustee to handle the money.

See Tara Siegel Bernard, Tips for the Future Care of Disabled Family Members, The New York Times, March 27, 2015.

Special thanks to Matthew Bogin (Bogin Law) for bringing this article to my attention.

March 30, 2015 in Disability Planning - Health Care, Disability Planning - Property Management, Estate Planning - Generally, Guardianship, Non-Probate Assets, Trusts | Permalink | Comments (0) | TrackBack (0)