Category Archives: Financial Planning

Estate Planning for Retirement Years

Retirement is a highly-anticipated reward for years of hard work and child rearing. The “golden years” are viewed as a special season to pursue hobbies and enjoy life. Interestingly, while many people seek advice from a financial advisor to make sure they have enough money to retire, often they do not obtain a professionally prepared estate plan. Instead of working with an attorney, they will do one of the following:

  • rely on outdated wills, trusts, and powers of attorney drafted many years earlier,
  • use estate plan forms downloaded from the Internet, or
  • not worry about estate planning at all.

All of these approaches are a disaster waiting to happen. There is simply no substitute for an estate plan prepared by an attorney because the legal issues facing older adults are far too complex.

The Advantages of an Elder Law Attorney

Since retirement typically happens later in life, aging and health concerns become more of a priority. A person who relies on the three approaches above will face several disadvantages:

  • Old estate plan documents typically focus on the children and not the retirement years.”
  • Canned” estate plan forms and those purchased from estate planning services are not tailored to the person’s unique circumstance and are not adequately state specific.
  • Long-term care planning strategies are not authorized or adequately addressed.

On the other hand, an elder law attorney will provide experience and specialized training required to plan for and cope with the unique legal issues that accompany aging. Elder law attorneys prepare documents that are:

  • tailored to a client’s personal circumstances,
  • current and state specific, and
  • designed to maximize eligibility for public benefits such as Medicare, Medicaid, Veterans benefits, and Social Security.

Estate Plans Focused on Retirement

At first glance, every estate plan seems to use the same few documents: wills, trusts, financial powers of attorney, and medical powers of attorney. It is important to realize that a document labeled as a “will” or “power of attorney” is not necessarily appropriate for the situation. A power of attorney prepared for a 75 year old should be very different from one prepared for a 40 year old. The financial and health needs of an older person are much different than those of a younger person, and their legal documents need to address those differences. Below are some examples of how estate plan documents for senior adults are tailored specifically for that season of life.

Financial Powers of Attorney. This document authorizes someone to make financial decisions on your behalf. For retirees, this is the single most important document for managing long-term care needs. Carefully crafted powers should be included to deal with retirement accounts, beneficiary changes, transfers of assets, creation of legal documents, and extraordinary powers for long-term care planning.

Medical Powers of Attorney/Patient Advocate Designation. This document authorizes someone to make medical decisions on your behalf. Each state has very specific rules about what decision the health care proxy is permitted to make. It should be drafted for the state of residence. Careful thought should be given to the powers to refuse or withdraw life support, deal with mental health treatment, and who should have the power to make those decisions.

Wills. A last Will and Testament is a well-known document goes into effect after death and disposes of assets passing through probate court. Many people mistakenly believe all of their assets will be controlled by their will. The truth is that a will does not touch some of a person’s largest assets, like IRA’s, annuities, and life insurance. Moreover, wills are not useful during periods of incapacity.

Trusts. Trusts are much more beneficial than wills when it comes to dealing with aging issues and long-term care needs. A trust has several advantages over a will as it:

  • is useful during periods of incapacity,
  • is adaptable to a variety of strategies for Medicaid and VA eligibility,
  • maximizes assets for a healthy spouse under special conditions,
  • benefits disabled children, and
  • avoids probate court process if properly structured.

Summary

The importance of up-to-date estate plan documents that are personalized to the present season of life cannot be overstated. These documents allow trusted family members and advisors to take over management of assets during a period of incapacity. They facilitate access to public assistance programs when needed to help pay for long-term care costs. They minimize the need to involve a probate court judge for the appointment of a Guardian when a person is incapable of making care decisions or the appointment of a Conservator if the individual is not able to manage their finances.

Every person of retirement age should have an elder law attorney on their team of advisors. Senior adults who consult with an elder law attorney will have assurance that their legal documents have been carefully tailored to their unique situation. They will have peace of mind that they have planned for the financial and legal challenges unique to the retirement years.

Gene Richards_8x10@300Norman E. Richards (Gene) is a partner in the Livonia office of Cummings, McClorey, Davis & Acho, P.L.C. where he focuses his practice on estate planning and elder law. He assists clients with the development of customized estate plans to address their specific needs, including family owned businesses, senior adults concerned about long term care needs, and special needs trusts for children with special needs. He may be reached at (734) 261-2400 or nrichards@cmda-law.com.

Attorney Presents on Stepping into Retirement

img_4147.jpgOn January 16, 2019 Gene Richards, a partner in our Livonia office, gave a presentation on Stepping into Retirement- A Practical Action Plan to over 30 members of the Association of Legal Administrators (ALA) Detroit Chapter. The interactive workshop gave an overview of decisions and actions people should take before, during and after you retire to protect and cultivate your retirement accounts.

If your business or social group is interested in having Mr. Richards present a complimentary seminar on Stepping into Retirement, please contact us at (734) 261-2400 or nrichards@cmda-law.com.

What can families do to avoid probate court?

It is important to acknowledge that a probate court serves an important role during life and after death.  During life, a probate court (i) protects the financial assets of an individual needing protection (through a conservator) and (ii) oversees the medical and personal care needs of an incapacitated individual (through a guardian).  After death, the probate court supervises the collection and application of assets that were titled in the deceased individual’s name alone (meaning assets with no surviving joint owner or no surviving beneficiary).   In both situations, the probate court may provide valuable oversight and accountability.  Sometimes the court is needed to resolve disagreements over wills, trusts and powers of attorney, as well as to decide family inheritance feuds.

Regardless of the important role and value of probate court, some individuals prefer to stay away from the probate process if at all possible.  There are several legal tools that may be used to side-step probate court:

Powers of attorney – Powers of attorney, both medical and financial, are the two most important documents required in order to stay out of probate court during life.  A general, durable power of attorney for finances (GDPOA) nominates a trusted individual (known as the “agent” or “attorney-in-fact”) to manage legal and financial affairs for the person signing the document (the “principal”).  Medical decisions can be delegated to a patient advocate.  This is done with a durable power of attorney for health care, known in Michigan as a patient advocate designation (PAD).  It is important to note that the principal does not give up any rights or freedom by signing a power of attorney document.  The agent and patient advocate are fiduciaries who must act in the principal’s best interest and at the principal’s direction.

With a GDPOA that includes the proper language, the agent will have authority to handle real estate, financial accounts, retirement accounts, business interests, mail, motor vehicles, debts and other legal matters.  If a GDPOA is in place and provides the authority needed, it will not be necessary to ask the probate court to appoint a conservator to manage financial and legal affairs in the event of the principal’s physical or mental incapacity.

With a PAD, the named patient advocate may be authorized to make medical decisions on behalf of an individual who cannot make those decisions himself or herself.  This document also serves as a durable power of attorney for health care and for care, custody and medical treatment decisions.  This document and the powers in it are sometimes called a “living will” or an “advance directive for health care.”  The patient advocate has the authority to make a broad range of medical decisions, including decisions regarding life support, as provided in this document and in accordance with the individual’s wishes.

Trusts – Trusts are usually thought of as a type of will.  Unlike a will, however, a revocable trust operates both during life and after death.  Also unlike a will, a trust does not require probate.  The trust maker (“settlor”) sets up a document that designates an individual (“trustee”) to manage assets titled in the trust for the settlor during the settlor’s lifetime (if incapacitated).  Upon the settlor’s death, the trustee follows the trust’s instructions on distributing the trust’s assets to named beneficiaries.  As the trustee has legal authority over trust assets, the probate court is not needed to manage and distribute the assets of the trust.  This makes a trust a key tool to avoid probate during life and after death.

Beneficiary designations – Beneficiary designations may be used to transfer bank, investment and retirement accounts to specific individuals and charities upon death.  In some instances, a special kind of deed may work to transfer real estate on death.  The benefit of beneficiary forms is avoidance of probate upon the death of the account holder or real estate owner.  On the other hand, there are several disadvantages with these forms as they frequently (i) are not updated after divorces or deaths of family members, (ii) are not reviewed regularly, (iii) are filled out incorrectly, and (iv) do not coordinate with other estate plan documents.

Joint ownership – Accounts and real estate with multiple joint owners will transfer probate-free to the surviving joint owners.  Joint ownership is usually appropriate for married couples, unless it is a second, or more, marriage.  Joint ownership is not usually advisable between parents and children or other persons as this may cause tax, legal and inheritance problems.

Some things to remember:

  • Powers of attorney (medical and financial), trusts, wills and beneficiary documents should be reviewed frequently and updated as needed;
  • Each tool described above has a limited purpose and should be coordinated with other tools; and
  • It is risky to utilize these tools without consulting an attorney, CPA or financial advisor.

Gene Richards_8x10@300Norman E. Richards (Gene) is an attorney at the law firm of Cummings, McClorey, Davis & Acho, P.L.C. where he focuses his practice on estate planning and elder law.  He assists clients with the development of customized estate plans to address their specific needs, including family owned businesses, senior adults concerned about long term care needs, and special needs trusts for children with special needs.  He may be reached at (734) 261-2400 or nrichards@cmda-law.com.

CAREGIVER EXPO – A Must For Caregivers!

Caregivers – Don’t miss out!  Take advantage of the  “Solutions for Family Caregivers Expo” tomorrow (Saturday, October 14) from 9 to 2 at the Suburban Collection Showplace located in Novi, MI.  This is a once-a-year event, and only every other year in Oakland county.

I will be there alongside Jim Schuster, Elder Law Attorney, for the afternoon session called “Elder Law Mini-Course for Caregivers.” Drop by our booth. I’d love to see you and personally give you resource materials that will help you be a more informed and effective caregiver.

At no charge, you have access to many experts in seminars on topics such as: maximizing Medicare benefits, caregiver health, hospice, protecting assets, dealing with dementia, grief recovery, getting quality medical care, and elder law.  You’ll also have access to an exhibit hall stuffed with businesses providing support services to caregivers.  Thousands will attend this event.

Here’s the link for more information about the breakout sessions, times and directions: Caregiver Expo

 

I hope to see you tomorrow!

Virtual Currency Shouldn’t be Overlooked when Putting Together Estate Planning Documents

Gene Richards_8x10@300Virtual currency may not show up in portfolios of many senior adults, but it shouldn’t be overlooked when putting together wills, trusts and powers of attorney. Not surprisingly, a national survey on consumer use of virtual currencies found that among those 65 or older, 75 percent said they were “very unlikely” to purchase Bitcoins. However, some seniors are trendy and tech savvy and might have a virtual currency “wallet.” Here’s a well written blog article on the importance of addressing bitcoin and other virtual currencies in the estate planning process. I’ll add that it is also critical to identify all assets and resources when trying to qualify for Medicaid and VA assistance to pay for long-term care.  Without adequate planning a legal representative, whether agent under power of attorney, personal representative (a/k/a executor) of a will, or trustee of a trust will have difficulty dealing with unique property, such as virtual currency, if the owner is incapacitated or has died.

The elder law and estate planning attorneys at Cummings, McClorey, Davis & Acho, P.L.C. (CMDA) regularly assist clients in planning with unique assets, such as virtual currency.  Even if it is too late to plan, the CMDA attorneys can still help by petitioning for the appointment a conservator in the local probate courts.  Gene Richards may be reached at (734) 261-2400 or nrichards@cmda-law.com. 

Property and Health Care Decision-Making Agents for MS Client

Video 4 ImageWe want to share a series of videos (5 total) that demonstrate how Elder Law attorneys can help those with MS.  The forth video focuses on Property and Health Care Decision-Making Agents.  When an individual is diagnosed with MS, preparing for medical and financial decision-making by other people is a necessity. The video outlines what legal documents must be in place to ensure wishes regarding financial management and healthcare will be honored.

These videos were produced through the collaborative efforts of the National Academy of Elder Law Attorneys (NAELA), the National Multiple Sclerosis Society, and Stetson University College of Law.  The videos will be posted on successive days.  Or you can go directly here to watch them all at once.

The elder law team at CMDA is experienced in helping vulnerable clients of every age.  We are available to assist younger individuals dealing with a disability or debilitating illness such as MS.  We help our clients maintain quality of life and preserving independence for as long as possible. We hope you find value from these videos.  We also welcome your feedback.  Contact Gene at CMDA’s Livonia office by calling (734) 261-2400 or by email at nrichards@cmda-law.com.

Coordinating Attendant Care and Available Resources for MS Client

Video 2 ImageWe want to share a series of videos (5 total) that demonstrate how Elder Law attorneys can help those with MS.  The second video focuses on Coordinating Attendant Care and Available Resources.  People with MS, along with their family members, frequently engage caregivers from outside the home to assist in their care and provide respite for the family.  Doing so must be done carefully to ensure all legal and tax requirements are met and eligibility for public benefits is maintained.  This video focuses on the ins and outs of the various options for obtaining needed attendant care.

These videos were produced through the collaborative efforts of the National Academy of Elder Law Attorneys (NAELA), the National Multiple Sclerosis Society, and Stetson University College of Law.  The videos will be posted on successive days.  Or you can go directly here to watch them all at once.

The elder law team at CMDA is experienced in helping vulnerable clients of every age.  We are available to assist younger individuals dealing with a disability or debilitating illness such as MS.  We help our clients maintain quality of life and preserving independence for as long as possible. We hope you find value from these videos.  We also welcome your feedback.  Contact Gene at CMDA’s Livonia office by calling (734) 261-2400 or by email at nrichards@cmda-law.com.

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